Thesis On Corporate Governance And Risk Management

The most important functions of the audit committee were to; The importance of corporate governance in risk management is amply supported by the reasoning of the Kumar Mangalam Birla – member of the Committee on Corporate Governance to implement corporate governance in India.Risk Management is thus an integral component of corporate governance and good management.

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It is quite apparent from the above that an important aspect of corporate governance is the fact that corporate governance determines the financial health of an organization and has an important bearing on investors’ perception of risk.

Good corporate governance means lower risk and poor corporate governance means higher risk; this has an immediate reflection in the cost of capital and shareholder value.

Keywords: Corporate Governance, Risk Management, Accountability, Funding, India Corporate Governance and Risk Management An Indian Perspective In the highest tradition of social science research, we have to define our position, so, a brief description of what risk and corporate governance are is a good start.

Risk management is the identification, assessment and prioritization of risks.

Risk is defined in ISO 31000 as the effect of uncertainty on objectives (whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

The key issues in risk management are strategies which typically include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk.

In turn, their soundness largely depends on their capacity to identify, measure, monitor and control their risks.

The Kumar Mangalam Birla Committee on Corporate Governance appointed by SEBI has also highlighted this aspect when its stated in the report stating that “strong corporate governance is thus indispensable to resilient and vibrant capital markets and is an important instrument of investor protection.

Under pressure to maximize wealth they are prone to excessive risk, reckless conduct or in extreme cases, blatant manipulation of accounting figures.

The call for increased accountability grows louder every time there is a crisis in public confidence.

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