7 - The governing body and strategy Flashcards
Learning outcomes - Chapter 7
- understand and explain in detail the intrinsic relationship between governance and strategy
- consider the alignment of strategy, risk and control as an essential part of governance
- determine the needs and expectations of differing stakeholder groups, recognising the particular drive and expectations of shareholders;
- demonstrate an understanding of the different aspects of internal and external risk that are faced within an organisation
What is considered the strategic expectation in a commercial organisation?
Maximising the long-term return to owners and enhancing the value of assets - promoting the success of the company
Governance involves responsibility and accountability for
the satisfaction of stakeholder expectations
What sits in the middle of the intersection between governance and operational management?
The role of the CoSec / governance professional
Operational management involves responsibility and accountability for
the delivery of process
Key differentiator between governance and operational management
Timescale involved
Op. management - short-to-medium frame
Governance - long-to-medium frame
Strategy should be aligned in triangulation with:
Risk and Control
4 stakeholder groups which must be considered per S.172
- Members as a whole
- Employees
- Suppliers and customers
- Community and environment
2 key benefits of controlling risk
Maximising the upside
Minimising the downside
2 benefit of shareholder model of governance for investors
Higher rate of return
Reduced risk
Other than consideration of stakeholders, other required aspects of promoting success of company per S.172 (3)
Long-term consequences
High standards of business conduct
Acting fairly between members
3 areas in which stakeholders can be classified
Internal (owners and employees)
Market (suppliers and customers)
External - direct (banks) and indirect (government, environment/community)
Primary and secondary expectations of owners
P - financial return
S - added value
Primary and secondary expectations of employees
P - pay
S -work satisfaction, training
Primary and secondary expectations of customers
P - supply of goods and services
S - quality
Primary and secondary expectations of creditors
P - creditworthiness
S - payment on time
Primary and secondary expectations of suppliers
P - payment
S - long-term relationships
Primary and secondary expectations of the community
P - safety and security
S - contribution to community
