Importance of Strong Enterprise Governance Practices
An important theme throughout these chapters is the importance of establishing effective governance, risk, and compliance (GRC) practices in an enterprise. While many of our chapters have emphasized the enterprise risk elements of GRC with a focus on the Committee of Sponsoring Organizations (COSO) ERM framework this chapter both defines and emphasizes the importance of strong and effective governance practices in today's corporation as well as all other public, private, and government enterprises. Governance here refers to the set of processes, customs, policies, laws, and institutions affecting the way a corporation or any enterprise is directed, administered, or controlled. It also includes the relationships among the many enterprise stakeholders involved and the goals for which that enterprise is governed. The principal stakeholders are usually viewed as shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.
Governance is much more than just members of senior management and the board of directors setting rules for all stakeholders and then expecting stakeholder compliance to these rules. It includes an enterprise's need for honesty, trust and integrity, openness, responsibility, and accountability as well as a need for mutual respect and commitment throughout an enterprise. This chapter will outline some commonly accepted principles of enterprise governance ...