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Businesses Risk

29 Mar 2018

We are all very aware that a major task in running any business is the need to minimise and cope with risks. Many are to do with immediate risks such as loss of a major customer, a health and safety issue or worry over inadequate insurance cover. While most risks are delegated to be managed by the directors to management, how the  board ensures this responsibility is carried out in line with its desires, can be difficult.

Some well known organisations’ boards have discovered recently that their belief and trust in management to make sound judgements like in contract pricing and management has been seriously misplaced.

What could they have done better? Firstly, to set policies on proven risk levels for contract negotiations, profit margins from contracts, and secondly, ensured those board level policies were adhered to through exception reporting and use of an auditing committee to regularly follow through critical policy adherence. 

CEO’s are contracted to follow board policies, to achieve approved plans and budgets and if a board does not carry out best practice to ensure they are achieved and followed could find itself over hot coals being roasted by the shareholders or the media!

 If you have any questions about this article please contact us.

 Eric Livingstone 

 

Tags: Board Member, Business

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