Question
The governance operating model increases the effectiveness of an organization by improving clarity, visibility, coordination, and effectiveness. It helps in defining roles, responsibilities, accountabilities, information flows, and guidelines needed for implementing governance. It also ensures that governance responsibilities are fulfilled by providing a clear understanding of management's decision-making and risk-management processes. Moreover, it aids in coordinated action by balancing considerations regarding centralization vs decentralization and considering local business, customer, compliance, legal, and other needs.
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Improved clarity–the board and management often run into a problem of translating governance principles into practices. The governance operating model makes a useful tool for the board to solve this problem by defining the roles, responsibilities, accountabilities, information flows and guidelines needed to implement governance. Greater visibility–to ensure that governance responsibilities are fulfilled, the board needs a clear understanding of management's decision-making and risk-management processes, which can be established by stating the types and amounts of investments and transactions and the risk exposures. Improved coordination–coordinated action requires balancing considerations regarding centralization vs decentralization and considering local business, customer, compliance, legal and other needs, which the model should be able to address, the experts say. Increased effectiveness–a model with specific data that the board and its committees require may serve the board in exec...
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