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Le Go > 7 - The governing body and strategy > Flashcards

7 - The governing body and strategy Flashcards

1
Q

Learning outcomes - Chapter 7

A
  • 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
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2
Q

What is considered the strategic expectation in a commercial organisation?

A

Maximising the long-term return to owners and enhancing the value of assets - promoting the success of the company

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3
Q

Governance involves responsibility and accountability for

A

the satisfaction of stakeholder expectations

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4
Q

What sits in the middle of the intersection between governance and operational management?

A

The role of the CoSec / governance professional

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4
Q

Operational management involves responsibility and accountability for

A

the delivery of process

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5
Q

Key differentiator between governance and operational management

A

Timescale involved

Op. management - short-to-medium frame

Governance - long-to-medium frame

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6
Q

Strategy should be aligned in triangulation with:

A

Risk and Control

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6
Q

4 stakeholder groups which must be considered per S.172

A
  • Members as a whole
  • Employees
  • Suppliers and customers
  • Community and environment
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7
Q

2 benefit of shareholder model of governance for investors

A

Higher rate of return
Reduced risk

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7
Q

Other than consideration of stakeholders, other required aspects of promoting success of company per S.172

A

Long-term consequences
High standards of business conduct
Acting fairly between members

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8
Q

2 benefits of shareholder model of governance for the economy

A

Encouragement of entrepreneurship
Encouragement of inward investment

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9
Q

Benefit of shareholder model of governance for management

A

Independence

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10
Q

2 benefits of stakeholder model of governance for investors

A

Closer monitoring of management
Longer-term decision horizons

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11
Q

Benefit of stakeholder model of governance for stakeholders

A

Deterrent to high-risk decisions

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12
Q

Disadvantage of shareholder model of governance for investors

A

Difficult to monitor management

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13
Q

2 disadvantages of shareholder model of governance for the economy

A

Risk of short-termism
Risk of senior management greed

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14
Q

3 disadvantages of stakeholder model of governance for management

A

Potential interference
Slower decision-making
Reduced independence

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15
Q

Disadvantage of stakeholder model of governance for the economy

A

Reduced financing opportunities for growth

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16
Q

3 areas in which stakeholders can be classified

A

Internal (owners and employees)

Market (suppliers and customers)

External - direct (banks) and indirect (government, environment/community)

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17
Q

Primary and secondary expectations of owners

A

P - financial return
S - added value

18
Q

Primary and secondary expectations of employees

A

P - pay
S -work satisfaction, training

19
Q

Primary and secondary expectations of customers

A

P - supply of goods and services
S - quality

20
Q

Primary and secondary expectations of creditors

A

P - creditworthiness
S - payment on time

21
Q

Primary and secondary expectations of suppliers

A

P - payment
S - long-term relationships

22
Q

Primary and secondary expectations of the community

A

P - safety and security
S - contribution to community

23
Q

Primary and secondary expectations of government

A

P - compliance
S - improved competitiveness

24
Q

2 benefits of shareholder model of governance for investors

A

Higher rate of return
Reduced risk

25
Q

2 benefits of shareholder model of governance for the economy

A

Encouragement of entrepreneurship
Encouragement of inward investment

26
Q

Benefit of shareholder model of governance for management

A

Independence

27
Q

Disadvantage of shareholder model of governance for investors

A

Difficult to monitor management

28
Q

2 disadvantages of shareholder model of governance for the economy

A

Risk of short-termism
Risk of senior management greed

29
Q

2 advantages of stakeholder model of governance for investors

A

Closer monitoring of management
Longer-term decision horizons

30
Q

Advantage of stakeholder model of governance for stakeholders

A

Deterrent to high-risk decisions

31
Q

3 disadvantages of stakeholder model of governance for management

A

Potential interference
Slower decision-making
Reduced independence

32
Q

Disadvantage of stakeholder model of governance for the economy

A

Reduced financing opportunities for growth

33
Q

Two extremes of power dynamic

A

Traditional - centralised, bureaucratic, structured

Empowered - devolved, participative, fluid

34
Q

Within which extreme of the power dynamic is their a greater ability for stakeholder influence

A

Empowered

35
Q

4 core forces which are continually impacting the organisation and its stakeholders

A

The law (UK, EU, worldwide)

Best practice (codes, customer expectations, industry norms)

Societal expectation (avoiding media criticism)

Visibility - dichotomy which exists between what we are willing to reveal about an organisation, and its strategic direction

36
Q

Simple definition of risk

A

Any circumstance with more than one possible outcome

37
Q

Two possibilities for risk appetite

A

Risk averting

Risk seeking

38
Q

A risk averse person (or group): (3)

A
  • Looks for certainty of outcome (preferring facts to theories)
  • Prepared to sacrifice opportunities that might exist for change
  • May be intolerant to challenge
39
Q

A risk seeking person (or group): (3)

A
  • Accepts that life is full of options and uncertainty (preferring imagination to facts)
  • Has confidence using their abilities to counter whatever they may face
  • May dismiss the realities that confront them
40
Q

Define risk capacity

A

Maximum level of risk that can be taken

41
Q

5 perspectives (types) of organisational risk (with examples)

A

Financial - gearing considerations
Operational - supplier/customer issues damaging reputation
Competition - losing market share often as a result of reputational damage
Environment - tax affairs of entities damaging reputation
People - behaviour/words of leaders

42
Q

4 aspects of risk control

A

KPIs
A risk register
A risk matrix
Balanced scorecard (has many uses asides from risk)

43
Q

What does a risk matrix measure (2 axis)

A

Severity
Probability

44
Q

On what would risks be listed, categorised and weighted

A

A risk register

45
Q

Three dimensions (stages) of risk management

A

Identification
Evaluation
Mitigation

46
Q

Define reputation

A

The beliefs or opinions that are generally held about someone or something

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