COVID-19: ADDRESSING DEBILITATING RISKS REQUIRES A ROBUST GOVERNANCE FRAMEWORK (2020-04-17)

The President of South Africa made what most people believe to be a good strategic call on the national Corona virus lock-down, including the implementation of the relevant regulations intended to protect the citizens of South Africa from contracting the disease. So far, it would appear that this strategy is working and that South Africa is using the time to prepare the national health system to cope with an imminent exponential influx of patients.

1.

A governance framework

• The Corporate Governance Framework® drives a common view and understanding of the organisation’s governance structures and processes with a view to improving the timing and quality of decision-making.

• In addition — in its simplest of form — it gives a high level view (on a simple red, amber, green (‘RAG’ methodology basis) of the extent to which all the components of governance are being efficiently and effectively monitored, managed and controlled.

2.

Timing

• The timing of decisions is critical. Acting proactively, reactively or sluggishly usually distinguishes those organisations that succeed from those that fail. Never has this been more true than in today’s lockdown environment. Many businesses are currently faced with restructuring decisions; the trick will be to know when to start executing these decisions to ensure business continuity. The Corporate Governance Framework® will assist in identifying those areas of the business which require more immediate decision-making.

3.

Reliable information

• Acting upon non-verified information, or unreliable sources of information is in itself a recipe for disaster. Equally dangerous, is acting when certain key information is weak, or missing. It’s critical for leaders to understand the necessary and relevant information at the right time and place. The Corporate Governance Framework® through its governance assessments can assist the board and management in addressing one of its biggest challenges: acknowledging what is not known and / or understood, and then trying to appropriately fill these knowledge deficiencies.

4.

Evidence

• The burden of proof cannot be over-emphasised. Hard facts and evidence need to be presented and commonly understood. The Corporate Governance Framework® requires evidence to support any GRC assessments and helps to ensure that decision-makers are better equipped to vary their decisions and instructions in line with the organisation’s risk appetite and risk tolerance levels. Having your evidence readily available shortens the time for decision-making, especially during a crisis.

5.

Co-ordinated approach and communication

• The Corporate Governance Framework® helps eliminate ‘siloed-thinking’ and enables a greater cohesion between functions, departments, divisions and geographic regions. A better understanding of the ‘big picture’ and how every area of the business is inter-related, helps to instil an innovative culture and is particularly valuable when the business is faced with the need to drive a sudden change in strategy or achieve improved efficiencies and altered cost structures.

• Bridging the communication gap between management and the board also holds immeasurable benefits for the organisation in ensuring that decision-making is authorised, transparent, supported and coordinated both during ‘normal’ trading circumstances and times of crisis.

6.

Roles, responsibilities and competencies

• Every board will agree that everyone in the organisation must understand their role and responsibilities that need to be executed to successfully and sustainably achieve the organisation’s mandate.

• Although many businesses implement a job-grading system and would claim that their job descriptions are well documented and implemented, the governance assessments (performed through the Corporate Governance Framework®) often identify gaps between the existing skills and qualifications base and the desired skills and qualifications base required to meet the organisation’s strategy and implement its operating plans in accordance with the organisation’s policies, procedures, performance agreements and ultimately best practice. Having a good (prior) understanding of the organisation’s strengths and weaknesses in this regard will facilitate the implementation of risk mitigating initiatives.

7.

Transparency and ethics

• Inconsistent, ill-conceived and uncoordinated decision-making undermines trust in the organisation and its leaders.

• Ethics lies at the heart of the Corporate Governance Framework®. Instilling a values-based approach to management helps to empower employees to make decisions which they believe are in the best interests of the organisation and it builds a culture of accountability. Against this backdrop it becomes easier for the board and management to implement change while remaining within their risk appetite and risk tolerance parameters.

• The governance framework dashboard not only helps to prioritise resource allocation, but also serves to underpin transparency and drive performance. These values become even more critical during times of crisis when stakeholders are looking for reassurance that the business will be able to manage the risks (known and unknown) and continue to be sustainable.

8.

Impact of the governance framework on the organisation

• Correctly implemented, the Corporate Governance Framework® facilitates informed and timeous decision-making which makes the business more agile and resilient in respect of risks. In these current times, being able to respond quickly to changing market conditions is a strategic differentiator.

9.

Benefits for the board

• A strong board comprises different personalities with varying skills and experience backgrounds. The Corporate Governance Framework® enables the chairman of the board to positively harness the strength of such diversity to create value for the organisation by adopting a disciplined approach to performance management.

• In addition, the non-executive board members have improved up-to-date access to information about the organisation, particularly as regards the organisation’s GRC status.

• The implementation of the governance framework drives accountability. As such, it becomes a good tool to measure the extent to which executives and non-executives are adhering to their fiduciary duties and acting in the best interests of the organisation.

10.

Sustainability

• The behaviour and actions taken by leaders, in the best and worst of times, is what determines the final outcome of an organisation’s success and sustainability. With a thorough GRC overview, leaders are better equipped to make informed decisions, and implement meaningful actions to mitigate and or reduce the effects of any risks that may harm, or even render the organisation unsustainable.

CGF Research Institute (Pty) Ltd
Terrance M. Booysen (Chief Executive Officer)
Tel: +27 (0)11 476 8264 | Cell: +27 (0)82 373 2249
E-mail: [email protected]
Web: www.cgfresearch.co.za

CGF Research Institute (Pty) Ltd
Jené Palmer CA(SA) (Lead Independent Consultant)
Tel: +27 (0)11 476 8264 | Cell: +27 (0)82 903 6757
E-mail: [email protected]
Web: www.cgfresearch.co.za