SYLLABI PART D CORPORATE GOVERNANCE AND RISK MANAGEMENT

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Corporate Governance has emerged on the global agenda in pursuit of proper and efficient practice in the  administration of the business entity. The objective is probity in business activity, compliance with law and  regulation, and the securing of reputation and confidence towards the attraction of inward investment. The Chartered Secretary is the key corporate player and the global Profession has emerged as a benchmark for the  development of best practice.


 

1. Aim
To instil the knowledge and key skills necessary for the Chartered Secretary to act as chief adviser to
the Board on best practice in corporate governance, and as the catalyst for systematic application in
the major global forms of organization.

2. Learning Outcomes
At the conclusion of this module, the candidate will be able to:

  • Research and apply the growing global information sources on corporate governance.
  • Promote awareness of, and be responsible for continuing self and personnel development on corporate governance themes.
  • Promulgate corporate governance principles and best practice in the employing or client organization.
  • Apply professional knowledge and skills to the resolution of practical issues and problems in the proper governance of the employing or client organization.
  • Understand and apply the concepts of probity and ethical standards in governance.
  • Understand and advise on the impact of corporate governance principles on the role of Directors, the Secretary, and the audit function.Pre-Requisite Learning

Evidence of assessed pre-requisite knowledge and understanding in the following disciplines must be
demonstrated through the Institute’s examinations, or those of equivalent qualifications which have
been approved as meeting the Institute’s required curriculum and standards:

  • Corporate Law
  • General and Strategic Management
  • Financial Accounting
  • Cost and Management Accounting3. Learning Content

SECTION A – Corporate Governance
3.1. The Definitions and Objectives of Corporate Governance
The corporate entity would incorporate state owned enterprises (SOEs); legality, separation of
ownership and operation. The concepts of ownership and accountability, ethics and performance.
The “enlightened shareholder and stakeholder” concepts. The state as shareholder. Models of
hierarchic and functional relationships in governance. One-tier and two-tier Boards.
The external and internal pressures for sound governance. History and ongoing developments in
corporate governance. The Reports: from Cadbury and King onwards; national and international
sources. The Combined Code. Corporate governance guidelines: OECD; the Commonwealth
Association. The governance agenda in the developing and developed economies. International
networking.

3.2. The Regulatory and Ethical Framework
The role of legislation and regulation in corporate governance. The nature and importance of
compliance. Compliance statements. The ethical dimension: codes and practices. The assessment of
corporate performance: yardsticks and measurement; corporate review, disclosure. Key concepts:
inclusion; openness; honesty, transparency; probity; accountability; judgement; social and
environmental responsibility.

3.3. Sound Governance
The concept of best practice in governance: in companies, statutory corporations and trusts.
Understanding the distinct and separate roles, duties and responsibilities of corporate officers and
stakeholders: chairman, chief executive officer, directors, secretary and shareholders/members.
Shareholders: majority control; minority rights; the rights of members in guarantee companies. The
importance of the proper mix of appointments to the Board. Service contracts. Induction, orientation
and training. Responsibilities of the Board. Committees and their role. Audit, Remuneration,
Nomination. Internal controls. Overall business risk management and review. Internal structural
relationships in the organization.

3.4. The Secretary and Corporate Governance
The importance and special position of the secretary; the role in sound and effective governance.
Appointment and qualification. Control of corporate information and corporate reporting: the annual
report; the website. Communication with stakeholders. The “whistle blowing” concept: issues and
problems, protection.

3.5. Directors
Executive and non-executive directors. Chairman, Managing director. Shadow and alternate
directors. The concept of independent directors. Commonality of legal duty. Comparison of roles,
needs, powers and duties; appointment, reappointment and rotation, remuneration, removal, retirement evaluation of the Board and Board members and disqualification. Directors’ liabilities,
indemnity and insurance. Borrowing powers. Conflict and disclosure of interest. Share dealing;
model codes; insider dealing. Company records. Directors’ disclosures, service contracts and
agreements.

3.6. Audit
The contribution of internal and external audit to sound governance. Audit reports and their use.
Appointment and removal. Independence and remuneration: rights, powers and duties in the
governance framework.

SECTION B – Risk Management
3.7 Definition of risk as measured in terms of impact, likelihood and consequences.
3.8 Risk Composition as reflected in acceptance, analysis, assessment, avoidance, containment, control,
engineering, evaluation, financing, management, processing, reduction, retention, transfer and
treatment.
3.9 Sources of risk as defined in the following terms economic, financial, human, security, operational,
regulatory compliance, natural hazards, product liability, occupational health and safety,
environmental, ICT, professional liability and corporate governance.
3.10 Risk management policy to include but not limited to:

  • Strategic setting and review of all levels
  • Management commitment to implementation and maintenance of ERM (enterprise wide risk management).
  • Clearly defined personnel responsibility and authority in carrying out ERM
  • Implementation programme to deal with elements mentioned under risk assessment and management in risk composition stated above (1.2).

3.11 Sources of information include but are not limited to past records, relevant experience, relevant
published literature, industry practice and experience, market research, experiments and prototypes,
economic engineering or other models, specialist and expert judgement.
3.12 Tools and Techniques for Risk Identification
These should include but not limited to:

  • Structured interviews with experts in the area of interest.
  • Use of multi-disciplined groups of experts because there is wisdom in the multitude of councillors.
  • Evaluation of questionnaires
  • Computer software and business models
  • Internal evaluation packs
  • Internal and external audits
  • Staff training

3.13 Risk Analysis

  • Qualitative analysis which deals with likelihood and consequences template. Quantitative analysis which deals with statistics and actual numbers.

3.14 Risk Treatment
A number of actions are available to reduce risk or eliminate risk. These include but are not limited to
compliance, reviews of contracts, preventative maintenance, carrying out research and development
and technological development and maintain quality assurance and standards.
A number of procedures can be adopted to reduce risk as follows but not limited to IT selection
procedures, disaster recovery plans, pricing policy, design features and checklists.

3.15 Risk Issues Management
Role of issues management is risk management issues management Life Cycle Reputational risk
precedents in issues management.
3.16 Documentation
A risk register essential and critical as it must contain source, nature of controls etc pertaining to
various risks identified and being dealt with.
3.17 Best Practice by Other
Best Practice and recommendations by other countries in Risk Management

  • King Code III 2009
  • OECD Principles of Corporate Governance 2004
  • Financial Services Council UKCG Co

Recommended Reading
AUTHOR TITLE & EDITION PUBLISHER CITY
Coyle B (2003) Corporate Governance ICSA Publication London
Institute of Directors /King II
Report on Governance for
South Africa (2009)
Chartered Secretary Journal IODSA Johanesburg
Standards on risk management such as
SAZ 829, ISO31, AS NZ 4360 – 2400
Statutory instruments per sector Government
Printers
Harare
Regester M & Larkin J
(2008)
Risk Issues and Crisis Management in
Public Relations (A Casebook of Best
Practice)
Kogan Page London
AS – Australia
NZ – New Zealand

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