The importance of corporate governance and the role of risk management in the business sector.

Abstract

Corporate Governance is the set of rules that define the relationship between stakeholders, management, and board of directors of a company and influence how that company is operating. At its most basic level, corporate governance deals with issues that result from the separation of ownership and control. But corporate governance goes beyond simply establishing a clear relationship between shareholders and managers”. (OECD Principles of Corporate Governance, 2004) Corporate governance is about how companies make decisions, how they organize and arrange themselves and how they communicate with shareholders and the rest of the world. Normally, corporate governance deals with concerns such as the way of choosing the board of directors and the executives, what obligations and responsibilities boards and executives have, whether shareholders have any privilege to participate in specific types of business decisions through voting and, if they have these rights, what form they take.