Board Responsibilities: Risk Management, Governance, and Transparency

In a move to enhance corporate governance and risk management practices, the regulatory body has issued new guidelines outlining the key responsibilities of boards of directors in various types of institutions.

Key Responsibilities

• At least two individuals must effectively direct the business of an institution, with one or more executives reporting directly to the board. This applies to companies, partnerships, and unincorporated associations of persons.
• The board is responsible for risk oversight, establishing a sound mechanism to identify and address relevant risks.

Risk Management

• Understand the risks faced by the institution and set a risk appetite that aligns with its objectives.
• Have policies and procedures in place to:
  • Identify material risks
  • Measure and monitor risks
  • Control and mitigate risks
  • Report material risks
• Smaller institutions may involve direct involvement from the board and senior management, while larger institutions should establish a formal risk management function with adequate resources and independence.

Internal Controls

• Ensure that financial and management information is:
  • Reliable
  • Timely
  • Complete
• Ensure compliance with laws and regulations.
• The board is responsible for approving the internal control framework and reviewing its appropriateness annually.

Remuneration and Reporting Frameworks

• Remuneration arrangements must be consistent with effective risk management and align with the long-term interests of the business.
• Boards must ensure that reporting frameworks are in place for both internal and external stakeholders, including:
  • Shareholders
  • Other relevant parties

Conclusion

The new guidelines aim to promote transparency and accountability among institutions, and will come into effect [insert date].