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( This article was initially published by Tim Leach in our Linkedin Group https://www.linkedin.com/groups/3701313/)

I will do a post tomorrow with comments on draft US corporate governance guidance scheduled for release tomorrow.

ChatGPT’s view:
"An effective corporate governance framework should ensure accountability, fairness, and transparency in a corporation’s relationship with its stakeholders. The main elements include:

1. Clearly Defined Governance Structure
Board of Directors: Independent, diverse, skilled, and accountable.
Committees: Audit, Risk, Remuneration, and Nominations with clear mandates.
Management: Separation of roles (e.g., CEO and Chair), clear delegation of authority.

2. Defined Purpose, Values, and Objectives
Explicit articulation of the entity’s purpose and mission-critical objectives.
Alignment of strategy, risk-taking, and resource allocation with this purpose.

3. Accountability and Oversight Mechanisms
Board accountability for oversight of strategy, performance, and risk.
Clear lines of responsibility for first line (operations), second line (risk & compliance), and third line (internal audit).

4. Robust Risk Governance
Objective-centric risk management tied to top strategic and value preservation goals.
Transparency on risk appetite and uncertainties being accepted.

5. Transparent Reporting and Disclosure
Accurate, timely, and complete disclosure of:
Financial performance
Non-financial risks
Board decisions
Material ESG and strategy-related developments

6. Ethical Culture and Conduct Expectations
Clear code of conduct and ethical standards.
Mechanisms for whistleblowing, conflict-of-interest handling, and cultural assessments.

7. Stakeholder Engagement
Active dialogue with shareholders, employees, customers, and society.
Consideration of stakeholder interests in governance decisions.

8. Continuous Evaluation and Adaptation
Regular board evaluations, including skills assessments.
Periodic reviews of governance practices in light of emerging risks and global standards."

TL Comments:
2024 UK governance code calls on boards to review lists of “emerging and principal risks” (provision 28 page 13), not oversee risk/uncertainty linked to MISSION CRITICAL OBJECTIVES.

We will know tomorrow if NACD/COSO/PwC calls on boards to review lists of principal risks like UK guidance (ineffective “risk list ERM”); or oversee composite risk/uncertainty linked to MISSION CRITICAL OBJECTIVES being called for by US courts in civil suits against directors, and institutional investors.

All shareholders/broader stakeholders should hope new COSO/NACD guidance calls on boards to oversee composite uncertainty/risk linked to MISSION CRITICAL OBJECTIVES. It would have an immediate and massive positive impact on corporate governance around the globe. ChatGPT’s principal 2 above integrates with principal 4.