Principle two of King I report states that the board of directors and managers should ensure that through a managed and effective process, board appointments are made that provide a mix of proficient directors, each of whom is able to add value and to bring independent judgement to bear on the decision-making process. Describe how this principle is important in risk management?

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Principle two of King I report states that the board of directors and managers should ensure that through a managed and effective process, board appointments are made that provide a mix of proficient directors, each of whom is able to add value and to bring independent judgement to bear on the decision-making process. Describe how this principle is important in risk management?

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A company's board of directors serves as stewards and acts in the best interests of the shareholders. Its key goals are to maximize shareholder value, serve as an environmentally and socially responsible corporate organization, and maintain and improve the company's competitive advantage. Thus, it is obvious that the board has an enormous duty and that the cornerstone of excellent corporate governance is its flawless performance. The fundamental idea of risk management is to put in place a framework that reduces the likelihood of mistakes, fraud, or losses. It also includes the proper oversight procedures and flagging occurrences to alert of any lapses. Thus, it is evident that the foundation of risk management is a consistent, repeatable procedure.

 

 

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