Newsletter | Volume 1

The Board of Directors (BoD) has critical decision-making authority that can have serious positive or adverse consequences for the entire company. Research has repeatedly shown, that groups on average make better decisions and fewer mistakes than individual leaders. Therefore, to increase odds of success, the new directive of roles and responsibilities of the BoD Audit Committee makes the group rather than an individual accountable.

The board of directors is not a typical management team. It is the individuality, diversity, expertise and knowledge that together form the power dynamics between the members and management.

So how can responsible boards that focus on Governance, Risk Management, Compliance and IT-Security (GRC) perform against this new awareness presented on the additional role and responsibility of the Audit Committee;

Deliver the expected performance and GRC results by social growth mindset
Respond to sustainability, CSR/ESG and HR issues
Create value by focussing on behaviour and diversity

Opportunities to increase board effectiveness

Prioritising 'good business' is only consistent in 28% of the boards. The report suggests that an organisation's impact on broader society issues still seem to have a 'nice to have' objective. By doing so, the boards and therefore the businesses are missing key opportunities for improved profitability by focusing primarily on financial returns. Alarmingly, more than a quarter of members of the board report never having experienced an external effectiveness review –

Other main findings of the report were that 51% of respondents did not think that 'diversity' on their boards was a concern and only a third of respondents were concerned with diversity as part of their succession plans. http://www.copenhagencompliance.com/news/issueXVII/news-09.php

Among the issues that will be discussed at the forthcoming Audit Committee Network meeting include issues such as; active monitoring of the business, group processes such as information sharing, broad participation, cohesiveness, transparent decision-making processes, goal clarity, and the vital components to predict group performance.

Effective collaboration as a team means better financial outcomes

Many boards do not consider that how they operate as a group must be a priority. Only if the BoD and the audit committee operate as a group, they can monitor their business effectively and avoid mistakes that negatively impact results; miss critical opportunities and reach their fullest potential.

DIGITISATION as a disruptor – affects everything within the organisation: from operational efficiencies and revenue generation to increasing the risks of cyber and security breaches.
A disruptor, or being disrupted. How to conduct regular competitor analyses, seek expert external advice, upskill existing board members and conduct evaluations
DIVERSITY AND INCLUSION is not about under-represented groups on the board and more about business effectiveness thru new perspectives, skills and challenging the thinking, capabilities, and experience to proactively manage the diversity
IMPACT ON BROADER SOCIETY by driving positive social outcomes that include wealth creation, societal well-being and benefit that embedded ethics and integrity throughout your organisation

The Danish Business Authority has recently updated a BoD survey that shows that there is greater compliance on governance issues in 2017 on the composition, role and responsibilities of the board of directors of the industrial foundation.

A higher proportion of the boards have a stipulation or a statutory clause regarding the length and term of office; now at 63% against 57% in 2012. Also, in 2017 36% have a requirement on the maximum number re-elections compared to only 4% in 2012.

However, more stringent requirements for qualifications of board members continues to be an issue, as 42% still do not have a stipulation on member eligibility. The survey illustrates another problem that 30% never carry out board evaluations, with another 16% that perform board evaluations every four years or less.

Elementary governance components like tenure, qualifications and annual evaluations must be on every chairman's agenda. http://www.auditcommittee.solutions/