Board committees and their functions

Board committees and their functions

The other committees that the board of directors delegates its oversight roles are the Risk Committee and the Governance and Compliance Committee. I will discuss the functions of these committees in detail below.The other committees that the board of directors delegates its oversight roles are the Risk Committee and the Governance and Compliance Committee.

I will discuss the functions of these committees in detail below.The Risk Committee comprises a minimum of three independent non-executive directors, as well as the chief executive and financial director. The chair of the board may not serve as chair of this committee. Members of the committee are individuals with risk management skills and experience.

The committee’s responsibilities include:l Reviewing and approving for recommendation to the board a risk management policy and plan developed by management.

The risk policy and plan should be reviewed regularly.l Monitoring implementation of the risk policy and plan, ensuring an appropriate enterprise-wide risk management system is in place with adequate and effective processes that include strategy, ethics, operations, reporting, compliance, IT and sustainability.l Making recommendations to the board on risk indicators, levels of risk tolerance and risk appetite.

l Monitoring and ensuring that risks are reviewed by management, and that management’s responses to identified risks are within board-approved levels of risk tolerance.l Ensuring risk management assessments are performed regularly by management.l Issuing a formal opinion to the board on the effectiveness of the risk management system and process of risk management.

l Reviewing the reporting on risk management that is to be included in the integrated annual report by ensuring that undue, unexpected or unusual risks are disclosed in the integrated report.

l Reviewing annually the charters of the group’s significant subsidiary companies’ risk committees and their annual assessment of compliance with these charters if an organisation has subsidiary companies so as to establish if the group risk committee can rely on the work of these risk committees.l Performing an annual self-assessment of the effectiveness of the committee, reporting these findings to the board.The last committee to consider is the corporate governance and compliance committee.

This committee plays a critical role in overseeing matters of corporate governance and compliance for the board, including formulating and recommending governance principles and policies
The primary objective of the Governance and Compliance Committee with respect to compliance is to review, oversee and monitor:l The company’s compliance with applicable legal and regulatory requirements.

l The company’s policies, programmes, and procedures to ensure compliance with relevant laws, the company’s code of conduct, and other relevant standardsl The company’s efforts to implement legal obligations arising from settlement agreements and other similar documentsl Perform any other duties as are directed by the board of directors of the company.

The committee performs its responsibilities by:l Overseeing the corporate compliance programme, including policies and practices designed to ensure the organisation’s compliance with all applicable legal, regulatory, and ethical requirements.l Recommending approval of the annual corporate compliance plan and reviewing processes and procedures for reporting concerns by employees and other stakeholders

l Recommending organisational integrity guidelines and a Code of Conduct.l Reviewing and reassessing the guidelines and Code of Conduct at least annuallyIt is very crucial that the board set up board committees so that its oversight responsibilities are carried out through committees.

Committees allow the board to:l handle a greater number of issues with greater efficiency by having experts focusing  on specific specialised areasl develop subject specific expertise on areas such as compliance management, risk management, financial reporting and auditingl enhance the objectivity and independence of the board’s judgment
The greater specialisation and intricacies of modern board responsibilities require that boards use board committees which ensure that:l responsibilities are sharedl more members of the board become involved in decision-makingl specialised skills of members can be used to best advantage andl inexperienced members gain confidence while serving on matters that are examined in more detail by a committee.

The committees remain accountable to the board while the board retains responsibility for the work of its committees.

However, the board should ensure that committees don’t dilute governance integrity by obscuring the direct link of the board and the CEO. It is therefore important that there is clarity of delegation of authority from the board to the CEO and it should be ensured that committees are not put between the board and the CEO, either by giving committees official instructional authority or by allowing them to evaluate performance using their own criteria. The board should regularly review the need for and relevance of each committee.

l Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy, advanced performance management and entrepreneurship. He is the Managing Consultant of Shekina Consulting (Pty) Ltd and provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans, tender documents and on how to build and sustain high-performing organisations.

For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062.

Previous Road works on schedule, says Directorate
Next Potato association on charm offensive

Warning: count(): Parameter must be an array or an object that implements Countable in /home/thepostc/public_html/wp-content/themes/trendyblog-theme/includes/single/post-tags-categories.php on line 7

About author

You might also like

Business

21 Lesotho Freight workers to lose jobs

MASERU – NEARLY half of Lesotho Freight Bus Services workers are set to lose their jobs at the end of the month as the government owned firm battles financial problems.

Business

Letshego donates blood

Rose Moremoholo MASERU – EMPLOYEES from two local companies and the Lesotho Correctional Service donated 20 pints of blood to the Lesotho Blood Transfusion Services last week. The workers were

Business

Board committees and their functions

The board of directors of an organisation has the ultimate control and management of an organisation. In order for the board to provide its oversight responsibilities effectively it uses board