GLOBAL - International Corporate Governance Network (ICGN) has launched new guidelines to raise standards of corporate governance worldwide.
The guidelines will assess how effectively a portfolio company's board is overseeing risk management, underlines the hurdles investors face and how these should be tackled.
The risk oversight consists of three sections offering companies guidance on corporate risk oversight, investor responsibility in improved risk governance and principles for company disclosure of the risk oversight process.
ICGN said the guidelines were primarily for institutional investors but added auditors, risk advisory and rating firms, and provincial, national and international supervisory bodies should also use them.
Christianna Wood, chairman of the board of governors at ICGN said: "We offer directors and investors these tools to improve the risk oversight of listed companies. We have implemented some of the lessons learned after the global financial crisis and the corporate devastation of the last couple of years. Shareholders and directors need to continue to be diligent in their oversight of risk."
The ICGN proposals state:
• The risk oversight process begins with the board. The board has an overarching responsibility for deciding the company's strategy and business model and understanding an agreeing on the level of risk that goes with it. The board has the task of overseeing management's implementation of strategic risk management.
• Corporate management is responsible for developing and executing an enterprise's strategic and routine operational risk program, in line with the strategy set by the board and subject to its oversight.
• Shareholders, directly or through designated agents, have a responsibility to assess and monitor the effectiveness of boards in overseeing risk at the companies in which they invest, and to determine what level of resources they will dedicate to this task. Investors are not themselves responsible or risk oversight at corporations.
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