Corporate Governance and Risk Management

Introduction

•Corporate Governance

•What does it mean? and

•Why does it matter?

•Risk Management

•Challenges of growth

•Organisational Development

Corporate Governance: what does it mean?

Corporate governance refers to the mechanisms, processes and systems by which corporations are controlled and directed

Corporate Governance

The Five Principles of Corporate Governance

1. Rights and equitable treatment of shareholders 2. Interests of other stakeholders

3. Role and responsibilities of the board

4. Integrity and ethical behaviour

5. Disclosure and transparency

Corporate Governance: why does it matter?

•Big organisations take it seriously

•If your business is well governed, you will find it easier to borrow money and/or raise capital

•Independent non-executive directors can be helpful. In fact, if you get the right people, they can be very helpful.

•Your day-to-day business operations will be better.

•Improved Systems and Controls

•Improved Risk Management

•Improved Strategy

•Reputation

6

Risk Management: Objectives

Give you a practical approach, framework and tools so you can start implementing risk management when you get back to the office.

Share some lessons learned. Share some tips and tricks.

7

Why do we need Risk Management?

“The only alternative to risk management is crisis management --- and crisis management is much more expensive, time consuming and embarrassing.”

Feature of good corporate governance

Managing growth is challenging

88

Risk Management is not easy, but it can be kept simple and logical

A simple framework

Evaluate & Take Action

Evaluate & Take Action

EstablishObjectives

EstablishObjectives

IdentifyRisks & Controls

IdentifyRisks & Controls

AssessRisks & Controls

AssessRisks & Controls

Monitor& Report

Monitor& Report

Step 1 Step 2 Step 3 Step 4 Step 5

Communicate, learn, improve

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Risk Management is critical to ALL levels of decisions

Decisions can be categorized into three types. The amount of risk (uncertainty) varies with the type of decisions. Most decisions are concerned with implementation.

UNCERTAINTY

Strategic Strategic

Programme Programme

Project & Operational Project & Operational

Strategic Decisions

Decisions transferring strategy into action

Decisions required for implementation

10 Slide 10

Categorizing Risk – Comprehensive

1. Political or Reputational Risk

2. Financial Risk

3. Service Delivery or Operational Risk

4. People / HR Risk

5. Information/Knowledge Risk

6. Strategic / Policy Risk

7. Legal / Compliance Risk

8. Technology Risk

9. Governance / Organizational Risk

Slide 11

Risk Prioritization – likelihood and impact

Likelihood of a risk event occurring Very High: Is almost certain to occur

High: Is likely to occur

Medium: Is as likely as not to occur

Low: May occur occasionally

Risk Impact: Level of damage that can occur when a risk event occurs

Very High: Threatens the success of the project

High: Substantial impact on time, cost or quality

Medium: Notable impact on time, cost or quality

Low: Minor impact on time, cost or quality

Slide 12

Risk rating

…Combining impact and likelihood

LIKELIHOOD

IMP

AC

T

1

1

2

2

3

3

4

4

5

5

RISKI x L

RISKI x L

RISKI x L

RISK PRIORITIZATION MATRIX