A board’s role in corporate governance demands oversight, insight, and foresight. Board directors need to be more vigilant and make informed decisions as the business environment becomes more complex and volatile. It also requires coordinated efforts of all employees to ensure success.
A well-formed and constituted board should have members with a variety of skills and perspectives, who are willing to challenge the board’s beliefs and views. This will facilitate more comprehensive discussions and enhance the board’s overall effectiveness.
As the board’s duties change and evolve, it is essential to be prepared to handle the latest technology and issues like disclosures about climate and diversity that could affect a company’s bottom line. It is important to create a culture which promotes and encourages continual education and discourages complacency.
The board must establish goals and strategies, both long-term and short-term, and implement mechanisms for monitoring the progress towards these goals. The board also oversees the chief executive officer and sets the policies and guidelines which govern the company’s activities.
The board is accountable for determining which risks are acceptable and how to manage them while safeguarding shareholder interests. The board should conduct risk assessments, establish policies that guide their own actions as well as the actions of the manager and establish accountability systems to fulfill its stewardship duties.
