Governing The Corporate Governance Among Businesses During COVID Era
“Corporate Governance has now become a more crucial element than ever where proactive engagement of stakeholders is the way ahead for successful implementation of business practices.”
The outbreak of the COVID-19 pandemic has turned the world upside down; making people suffer, businesses facing turbulence, and economies going for a toss.
Whenever such crisis events happen, they bring with them a plethora of challenges. Still, the more important thing is that they also get many opportunities, leveraging rewards with the risk it offers.
The unprecedented situation that prevailed due to the pandemic made the businesses witness disruption, enabling the organizations to undergo crisis. Few went bankrupt, and few managed to survive while a few still figuring out ways to adapt to the change.
Corporate Governance is a set of rules, practices, and processes a company takes to control and direct itself.
The entire set of rules and regulations in Corporate Governance ensures how the organizations carry their functions, activities; and operations while maintaining the stakeholders’ interests.
Like other business operations and entities; corporate Governance of the organizations too faced the ill effects of the disruption that the pandemic has brought.
Corporate Governance – The Backbone Of An Organization:
The Corporate Governance at the industry level includes the steps, rules, regulations; and processes through which a company’s objectives are set and pursued regarding social, environmental, regulatory, and compliance.
It is the organization’s backbone, which defines how the entire framework of an organization’s business decisions.
Corporate Governance considers the practices and procedures that enable a company to run to achieve its objectives while ensuring the stakeholders’ interest in the business.
According to a recent survey, the significance of having a well-defined risk resilient corporate governance has increased by almost 30% since the emergence of the pandemic.
Initially, organizations that tend to neglect the very importance of corporate governance focus on streamlining the set of rules and regulations to make their mark and gain a competitive advantage amidst uncertainty.
Corporate Governance Risks – Something to Think About:
Corporate Governance acts as a driving force for the efficient, smooth, and ethical Governance of business practices.
The rules and regulations about how the businesses work and the businesses’ responsibility come under the umbrella of Corporate Governance.
ESG (Environment social governance) responsibility and CSR (Corporate Social responsibility) become a key focus area for the smooth functioning of business practices; maintaining a corporate structure.
It becomes of utmost importance while analyzing the overall business performance. Once the organizational structure gets hampered due to the crisis, it tends to shake its entire value chain from the employees to the board of directors.
It makes the businesses prone to organizational risks, which can hamper the entire business practice.
An organization’s change, the evolution of business models, and emerging technologies make the stakeholders susceptible to trust a particular business.
When any organization faces risks, it tends to become more vulnerable about its disclosures. It becomes doubtful for the business practices to operate in the same way they have been for long.
The reason is the continuous disruption that the entire industry undergoes.
It not only makes the changes evolve but also complies with the new way the business takes place.
Governing the Corporate Governance – Bridging the Gap:
Businesses undergoing disruption stress the very factor of managing their corporate Governance by focussing on what’s in hand rather than what the earlier practices were.
Furthermore, the emerging technologies such as IoT, Big Data, and AI make the organizations schizophrenic about investing and make them wonder about the ROI factor from the same.
At the same time, the organizations realize the need to govern their corporate Governance by using innovative measures to streamline their nosiness practices.
Addressing the Organizational Set up:
Organizations’ focus to address the organizational structure and setup has increased amidst disruption and crisis.
The overall organizational setup has changed with the disruption, making the businesses rethink their business models and strategies.
Organizations consider the set of rules, regulations, and policies that ensure greater transparency and accountability for the investors and other stakeholders by setting public targets and providing independent assurance on performance against these risks and opportunities.
Risk Identification, Assessment, and Management:
Governing Corporate Governance starts with redefining the traditional corporate structure to an innovative one to cope with the changes amid crises.
Organizations focus on improving business practices; redefining the business models by bringing in the CEO and CFO to work with the management to improve the risk mitigation priorities and ensure the security, safety, and well-being of the company’s workforce and other stakeholders.
The better the disclosures, the better the Corporate Governance of any business.
However, rather than a traditional approach to disclosure, investors believe in investing in companies that follow an upfront honest disclosure approach in alignment with the board of directors’ involvement.
Disruption is there, evolution is there, and so are the risks and uncertainties in crises. Businesses are transforming with digital tools and emerging technologies coming into play.
It also forces businesses to rethink business practices and reshape the business models to achieve their goals and objectives.
Along with the innovation in the business models; stakeholders’ proactive engagement is the way for successful implementation of business practice to achieve efficient corporate Governance.