Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences, Second Edition

6. Strategy, Performance Measurement, and Risk Management

As we mentioned in Chapter 3, “Board of Directors: Duties and Liability,” the Organisation for Economic Co-operation and Development (OECD) states that one of the primary responsibilities of the board is to “ensure the strategic guidance of the company.” The UK Corporate Governance Code recommends that directors “constructively challenge and help develop proposals on strategy.”¹ Furthermore, survey data from the National Association of Corporate Directors (NACD) indicates that directors themselves consider strategic planning and oversight to be their most important responsibility—more than financial oversight, CEO succession planning, compensation, and shareholder relations.²

Consensus ...