Enterprise Governance

Fifth Capital integrates its Enterprise Governance approach comprising considerations surrounding Governance, Risk and Compliance with the management of Brand and Reputation as particularly critical to longer term organisational equilibrium and value.

Fifth Capital addresses Enterprise Governance in line with the work of the Public Interest Oversight Board (PIOB) and the International Federation of Accountants (IFAC), a global organisation for the accountancy profession comprised of 159 members and associates in 124 countries and jurisdictions. The PIOB is an oversight body that provides enhanced credibility and legitimacy to the operation of the three independent international standard setting boards that it oversees and to the public interest work of the IFAC Compliance Advisory Panel.

Corporate Governance + Performance Governance

As such, Fifth Capital adopts the foundation of the definition of Enterprise Governance as comprising the entire accountability framework of the organisation comprising Conformance or Corporate Governance and Performance Governance. We highlight several of the findings of the report by IFAC dated 2003 Enterprise Governance - Getting the Balance Right:

good corporate governance on its own cannot make a company successful ..

a particular danger point is at times of transformational change when incremental changes in strategy fail to match the pace of change in the environment ..

even more aggressive transformational change may be required - often when the health of the underlying business has deteriorated considerably ..

there were a number of key issues that underpinned both success and failure - no single issue dominated -

culture and tone at the top

the CEO

the Board

internal risk controls

leaders need to lead

business strategy and risk strategy need to be aligned

special section - Role of the COO

IFAC conclude:

in cases of success, a virtuous circle emerged based on a conscious decision to take good governance seriously because it was good for the company rather than required by law or formal codes of best practice ..

note also

.. the underlying premise of enterprise risk management is that every entity exists to provide value for its stakeholders. All entities face uncertainty, and the challenge for management is to determine how much uncertainty to accept as it strives to grow stakeholder value. Uncertainty presents both risk and opportunity, with the potential to erode or enhance value. Enterprise risk management enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. Value is maximized when management sets strategy and objectives to strike an optimal balance between growth and return goals and related risks, and efficiently and effectively deploys resources in pursuit of the entity’s objectives.

Committee of Sponsoring Organizations of the Treadway Commission, 2004

Financial Institutions

Fifth Capital’s services to multinationals and its Compliance considerations integrate considerations in respect of Financial Institutions through the work of the Bank for International Settlements:

Compliance starts at the top [and] will be most effective in a corporate culture that emphasises standards of honesty and integrity and in which the board of directors and senior management lead by example. It concerns everyone within the bank and should be viewed as an integral part of the bank’s business activities. A bank should hold itself to high standards when carrying on business, and at all times strive to observe the spirit as well as the letter of the law. Failure to consider the impact of its actions on its shareholders, customers, employees and the markets may result in significant adverse publicity and reputational damage, even if no law has been broken .. [2]

The Compliance Function: BIS, 2005

 

Judge a person by their questions rather than their answers

Voltaire

 

Fifth Capital