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20th May 2016

Defining good Corporate Governance

Dr. Antonius Alijoyo of the Enterprise Risk Management Academy and CRMS Indonesia shares his thoughts on the importance of corporate governance today, the recent trends and developments in the field, and how his company implements it.

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Defining good Corporate Governance

How would you define corporate governance and why is it important today?

Corporate governance refers to check and balance mechanism to assure the best interest of company (firm) is upheld by all decision makers effectively – especially at the board, senior management and (controlling) shareholders – which would become the foundation of all corporate decisions and actions in fulfilling their corporate mission-vision toward triple bottom line objectives (Profit/Economic Value, People/Social Value, and Planet/Environmental Value).

What in your view does corporate governance bring to the industry?

It would bring tremendous positive effect to the ‘responsible’ industry who really care about their sustainability and continuation of civilization, welfare, and commonwealth.

How does your company implement it?

We assure the corporate governance is implemented across several layers:
• Cultural;
• Process;
• Structure.

Cultural means that Good corporate governance principles become the values that people believed in, starting from the shareholders, board members and executives. There have been conscious efforts made to assure those values become the working fundamental assumptions on every key decision making process. Whereas, positive artefacts have also been encouraged to recognize and award positive and ethical behaviours at all levels.

Process means to consider/recognize/ explicitly the principles of good corporate governance as guiding principles, consistently applied in all company’s business process for example treating fairly our minority shareholders, treating fairly our suppliers/employees, putting transparency at its best to the investors/shareholders via transparent corporate reporting, assuring accountability is crystal clear at every level of business processes, and embedding corporate social responsibility at our strategy and key business process such as using environmental friendly papers, reducing carbon footprint in our production process, and so on.

Structure means overall organization structure follows the principles of having check and balances starting from the Board level through the composition of their executive and non-executive directors, the existence of relevant boards’ committee, the existence of internal oversight/assurance roles, and how do they engage their external auditors and stakeholders at large through whistle blower system (which is run by trustworthy external independent party). Organization structure encourage people take up their accountability clearly and no ambiguity.

How does corporate governance affect tax legislation and cross border planning?

Albeit the tax legislation and regulation which are different from one country to another, the principles of corporate governance are universal. Therefore, it might affect some structural related issues but remain universal at underlying and fundamental aspects to promote transparency, accountability, responsibility and fairness.

What are some of the recent trends and developments in how to implement good corporate governance practices?

In my view, the trends and developments in how to implement good corporate governance practices are pretty much different from one region to other region, for example Africa Sub-Sahara who focuses on getting more international investors to the region, and therefore they emphasize on adopting and practicing more transparency but still not much on accountability, social responsibility and fairness. It might also be a case for Latin America, Middle East and North Africa, and some eastern European countries. In other regions, the challenges might have already shifted to other focuses, for example South East Asia which are now strengthening their regional corporate governance platform where many large corporations have already put their feet to become regional/international players rather than local, and therefore placing good corporate governance practices even higher than before.

Nevertheless, one common thing applied across continent and regional economic cooperations remain, i.e. the need of better board members (composition, evaluation) and the urgency of enterprise risk management good practices at the board level which require higher practices of risk governance – how do they address the uncertainties, enhance the organization’s capability to exploit opportunities whilst dealing effectively with the risks associated in pursuing their strategic/operational/compliance objectives.

What support is available to businesses looking to implement new governance statutes or looking to respond to allegations of wrong doing?

We work with the local Institute of Directors, National Committee on Governance, Consulting firms, Risk Management Associations, and with IFC-World Bank in many developing countries. To a certain extent, we could also ask some helps from academicians of respectable universities.

Company: Dr. Antonius Alijoyo ERMCP, CERG.
Web Address: www.crmsindonesia.org
www.erm-academy.org
Telephone: 62-813-1559-8888


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