This assessment investigates the issue of board and management financial and non-financial risks due to uncertain past or future events in an organisation of your choice. Please read thoroughly the background, task and format requirements discussed below.
Recent activities by some individuals in boardrooms and management have called into question whether their behaviour or ethics are in the best interests of shareholders and or wider stakeholders or communities (Ferguson & Gillett 2020; Vieira 2020). If directors and top management show little regard to culture, norms and business ethics in society, then in these circumstances, how well are other financial and non-financial risks identified and monitored? At a country level, a national corporate regulating body or (Federal) government could have Royal Commissions into an industry or sector behaving badly and change legislation to rein in poor director and executive management behaviour (Roddan 2020). At other levels, shareholder meeting votes, shareholder activism or whistleblowers can shine a light on untoward behaviour, including fraud and greed at the expense of shareholders (Ferguson & Gillett 2020; Tricker 2019). Elsewhere, market mechanisms such as mergers and acquisitions through the financial markets by other organisations, or bank covenants, administration and bankruptcy statutory processes, can control boards and executive management excesses even if it is sometimes too late.
On the other hand, boards and management doing the right thing can be caught off guard by uncertain events that cause risks at the strategic, managerial or operational levels. Boards of directors need to be made aware of and, preferably, have strategies in place for uncertain events and risks. Some risk examples at the strategic level include the recent COVID-19 pandemic or the ongoing effects of climate change and postures away from fossil fuel use, etc. (AAP 2020; Roddan 2020). Managerial and operational-level risks are more closely aligned with each organisation and their aversion to risk, and budget capacities to mitigate known risks or prepare for potential uncertain events (Tricker 2019).
Conduct a review of at least two uncertain events that lead to financial and or non-financial risks (i.e. at the strategic and management or operational levels) in an organisation of your choice as a corporate governance issue. Write a critical report about your findings. Use the concepts, tools and techniques learned in this subject to review these issues at the board and/or management levels.