Corporate governance is the process of setting rules, policies and controls and resolutions that promote a positive corporate culture and behavior. It also helps protect organizations from crises and risks to business such as corruption in leadership and cybersecurity threats. It also includes contingency plans to help companies cope with these forces of business and emerge on the other side stronger and more resilient.
Corporate governance structures and practices differ according to the size of a company and industry, ownership structure, and jurisdiction. These governance structures and practices, despite their differences must all share the same aim: creating long-term value for shareholders. They should also allow flexibility to adapt and modify their governance practices as necessary in order to achieve this goal.
The board of directors for a company is charged with establishing strategic goals, appointing and monitoring senior management, and representing the interests of shareholders. The board members must be aware of their responsibilities and work with senior management to meet them in a manner that aids the growth of the company and financial performance.
Stakeholders should be encouraged to engage in shareholder outreach as well as dialogue with the board and management of the company. They will be able speak out in areas that have traditionally been the responsibility of the board and the management, for example, strategic direction and the making of decisions. In doing this it is vital for management and the board to be honest and transparent with the stakeholders regarding their governance structures and practices as well as their reasons for using them.