Having a clear understanding of management's decision-making and risk-management processes can provide several benefits. It can lead to improved clarity, as it helps in translating governance principles into practices by defining roles, responsibilities, accountabilities, information flows, and guidelines. It can also ensure greater visibility, as it helps in fulfilling governance responsibilities by stating the types and amounts of investments and transactions and the risk exposures. Moreover, it can improve coordination by balancing considerations regarding centralization vs decentralization and considering local business, customer, compliance, legal, and other needs. Lastly, it can increase effectiveness by providing specific data that the board and its committees require.
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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...