PRINCIPLES OF GOVERNANCE AND WHY THEY ARE IMPORTANT
The context for improved governance, TRISCO is instituting significant system change in the business operation. Those on management board, developing new organizations and overseeing service changes have all been keen to understand how this will affect the way TRISCO organizations will be governed in the future.
This makes it clear that accountability will rest on the committees themselves. It is clear that the management requires a high degree of accountability and maturity from those leading the committee
The role of committee services hold some responsibility as top management. However, top management also have a key role in assessing quality alongside the committee itself. Management is not in place simply to defend the reputation of the company but has accountability to its employees and wider stakeholders.
This builds on corporate practice in the business operations where directors and boards have clear, balanced responsibilities to various stakeholders and are not just there to assure the business success of the company concerned.
Addressing Risk Management increasingly needs to take an eclectic view of risk, seeking positive assurance that claims are valid. This is difficult in times of financial constraint and system upheaval. Studies should be made on the amount of risk that TRISCO is prepared to accept, tolerate or be exposed to any point in time. Without proper guidance on the levels of risk that they are permitted to take, or not seizing important opportunities due to a perception that taking on additional risk is discouraged. The failures that gave rise to each crisis:
- Inability of members to exercise control
- blindness to inherent risks, such as risks to the business model or reputation
- inadequate claims to establish the loss profile of assured
- defective internal communication and information flow
- organizational complexity and change
- inappropriate incentives, both implicit and explicit
- ‘Glass Ceiling’ effects that prevent risk managers from addressing risks emanating from top echelons
The challenge for governance today adds up to a new and very different challenge to TRISCO in the coming years. We are moving away from a spoon-fed, prescribed model of leadership and governance to one where boards will need to craft their own arrangements, based on good governance principles and established better practice. Boards will need to ensure that they are in a state of continual preparedness for an ever-changing world, where significant demands are placed on their organizations and budgets.
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