This is a complete summary of all MANDATORY exam material for the course Accountability & Risk Management at the UvA. Summary of the articles, tutorials and lectures.
To make it clear: this summary does not include the articles that were said not to be on the exam.
Corporate governance, umbrella term that includes specific issues arising from interactions among
senior management, shareholders, boards of directors and other corporate stakeholders. Concerned
with holding the balance between economic and social goals and between individual and communal
goals. The aim is to align as neatly as possible the interests of individuals, corporations and society.
Principles underlying corporate governance in NL:
- A company is a long-term alliance between the various parties involved in the company.
- The stakeholders are the groups and individuals who (in)directly influence (or are influenced
by) the attainment of the company’s objectives. Stakeholders could be employees,
shareholders and other lenders, suppliers, customers, civil society etc.
- Management board and supervisory board have overall responsibility for weighing up these
interests with a view to ensuring the continuity of the enterprise, while the company aims to
create long-term shareholder value.
Accountability and corporate governance. Financial scandals have driven evolutions in corporate
governance. Codes and principles abound, key focus: improving transparency, internal control and
accountability for stakeholder groups. Corporate (organizational) governance is therefore partly
aimed at improving corporate (organizational) accountability.
Risk management and corporate governance. Purpose of corporate governance: to facilitate
effective, entrepreneurial and prudent management that can deliver the long-term success of the
company. The board of directors (management board) is responsible for determining the nature and
extent of the significant risks it’s willing to take in achieving its strategic objectives and the
maintenance of sound risk management and internal control systems. So, risk management is a core
component of corporate governance.
Responses to financial scandals continually emphasize the role of risk management in corporate
governance. Failures of corporate governance partially blamed on:
- Failures in risk management systems
- Lack of information about risk exposures reaching boards
- Lack of broad monitoring of risk management
- Lack of disclosure of risks and their management
- Lack of embedding of risk management in strategic decision making
Accountability, fluid concept at the heart of corporate governance. The giving and demanding of
reasons for conduct. Identifying where someone is responsible for and then providing information
about that responsibility to those who have rights to that information. ‘At the heart of accountability
is a social acknowledgement and insistence that one’s actions make a difference both to self and
others’. Two dimensions: Being held accountable Holding accountable.
Forms of accountability:
- Hierarchical accountability, short term functional orientation. Resource use, immediate
quantifiable impacts. External focus (oversight and control). Prioritizes upward, short-term
accountability to powerful patrons like shareholders.
- Holistic accountability, augments hierarchical accountability. For broader, sustainable
impacts (e.g. climate impact). Embraces accountability to broad sets of stakeholders.
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