Chapter 3: Effective Board Practices

Question 1

Evolution of Directors:

Answer 1

As companies grow, directors move from being technical gurus and sources of information for the company, to managing and strategy implementation roles.

Question 2

Why is it important for boards to regularly evaluate themselves?

Answer 2

Board evaluation is not a legal requirement but is considered good practice. It helps directors understand their performance, both individually and collectively, and improve alignment with corporate objectives. The Governance Code recommends that listed company boards conduct an annual evaluation, and for FTSE350 companies, this should be facilitated externally at least once every three years. The results, including any issues and actions taken, should be shared in the annual report. The evaluation looks at the board’s roles in direction in strategy, control through monitoring executive’s progress in delivering strategy, and support through its advisory role.

Question 3

What areas are considered when assessing board effectiveness?

Answer 3

Board structure
Board and company governance
Board monitoring
Board processes and Interactions

Question 4

What should be reviewed as part of the board evaluation process?

Answer 4

The structure, composition, and processes of the board should be reviewed to ensure they remain appropriate for the size, structure, and tasks of the organization. This review may not be annual but should be conducted regularly.

Question 5

Is there a standard approach for establishing a board’s composition?

Answer 5

No, there is no one-size-fits-all approach. Each board should determine the most appropriate composition based on factors like competencies, experience, diversity, independence, and any applicable regulations, such as the Governance Code for listed companies.

Question 6

What recommendations does the Governance Code provide for board composition?

Answer 6

The board should have both executive and non-executive directors (NEDs) (Governance Code principle G).
At least half the board members in the FTSE350 should be independent NEDs, excluding the chair (Governance Code provision 11).
Companies outside the FTSE350 should have at least two NEDs.
A majority of board committee members should be independent NEDs (Governance Code provision 17).

Question 7

How often should a board meet, and what factors should be considered when deciding?

Answer 7

While it is up to each board to decide the frequency of meetings, meeting more than once a month is often impractical due to the preparation and follow-up involved. Meeting less than quarterly is generally insufficient for effective oversight of the company’s operations. Private companies and subsidiaries may not hold regular meetings and may only meet annually to approve financial statements.

Question 8

What processes should be established for regular board meetings?

Answer 8

The board should establish clear processes, often led by the chair and company secretary, which include:

A schedule of future meeting dates.
Standing agenda items for regular meetings.
The structure and format of board papers.
A process for calling for board papers.
Circulating the board pack in advance.
A process for adding non-standard items to the agenda.
A robust method for tracking and progressing outstanding actions from previous meetings.
The process for drafting and reviewing minutes from meetings.

Question 9

What are the three major roles of the board?

Answer 9

Set corporate strategy; establish relevant and appropriate systems and policies of governance to monitor performance of the policies
and systems; provide a framework to provide support and advice to executive management team.

Question 10

Why is it important to regularly review the strategy and monitoring process?

Answer 10

Regular reviews ensure that the strategy and monitoring process remain appropriate and effective. Additionally, strategies and policies must evolve over time to adapt to changes in the business environment.

Question 11

What systems should a board have in place for effective monitoring?

Answer 11

Boards should have systems to monitor financial performance, internal control, risk management, related party transactions, controlling shareholders, and whistle-blowing processes.

Question 12

Why should board evaluations consider monitoring activities?

Answer 12

Board evaluations should assess whether monitoring processes remain fit for purpose and ensure they are still suitable as the business grows in scale and complexity.

Question 13

What should the board evaluation process include?

Answer 13

The evaluation should review board processes, including the meeting calendar, agenda, information availability, board packs, CEO-senior management relationships, and discussion quality.

Question 14

What challenges exist with board packs, and how can they be improved?

Answer 14

As business systems provide more detailed information, board packs have grown in size but often lack concise summaries. Overloading directors with too much information can be counterproductive. Company secretaries can help ensure board papers are:

Succinct but complete.
Contain an executive summary for lengthy documents.
Include clear recommendations if a decision is needed.
Clearly state the purpose (e.g., for discussion or approval).

Question 15

How important is the chair in board effectiveness?

Answer 15

The chair’s leadership is critical to an effective board. Their role includes overseeing board evaluations, ensuring productive discussions, and managing board dynamics.

Question 16

How often should board evaluations take place, and what are the key considerations?

Answer 16

Most companies conduct annual board evaluations, though no single methodology applies. The process depends on board structure, corporate culture, and external obligations like the Governance Code. Evaluations should involve both self-assessment and peer review.

Question 17

What are the possible outcomes of a board evaluation?

Answer 17

Outcomes can range from minor process changes to significant governance restructuring, including:

Adjustments to board processes.
Changes in board composition.
Creation or modification of board committees.
Major reforms in governance structure.

Question 18

Why must listed companies disclose board evaluation results?

Answer 18

To improve transparency, the Governance Code (Provision 23) requires listed companies to report findings and recommendations, outline how changes will be implemented, and evaluate those changes in future reports.

Question 19

How does board evaluation evolve over time?

Answer 19

After the initial evaluations, the process becomes routine, building on previous assessments and embedding itself in the annual governance cycle.

Question 20

How should the chair and directors be evaluated?

Answer 20

The chair should be evaluated by NEDs, led by the senior independent director, with input from executive directors.
The chair oversees evaluations of the board, committees, and directors, though this is often delegated to the company secretary.

Question 21

Should board evaluations be conducted internally or externally?

Answer 21

The decision depends on the scope and depth of the evaluation.

Internal evaluations offer familiarity but may lack objectivity.
External evaluations provide independent insights but may be costly.
A mix of qualitative and quantitative measures is ideal—qualitative measures provide rich insights, while quantitative data supports objective analysis.

Question 22

What are the advantages of an internally facilitated board evaluation?

Answer 22

Familiarity with the company – Internal evaluators understand the culture, objectives, and operations of the company.
Comfort in discussions – Directors and executives may feel more open speaking to a familiar colleague.
Lower financial cost – Conducting evaluations internally is cheaper than hiring external facilitators.

Question 23

What are the disadvantages of an internally facilitated board evaluation?

Answer 23

Lack of independence – Internal evaluators may be influenced by senior management or have a vested interest in the outcome.
Limited expertise – Internal facilitators may lack experience in conducting professional board evaluations.
Time constraints – Running a high-quality evaluation requires significant time, which internal staff may not be able to dedicate.
Reluctance to speak openly – Directors may feel uncomfortable discussing their own faults or those of their peers with junior staff.
Credibility concerns – If the review is overly positive, external stakeholders may question its reliability and objectivity.

Question 24

What methods can be used in an internal board evaluation?

Answer 24

Internal board evaluations can include:

In-house questionnaires – Designed by the company for internal use.
Third-party question banks – Standardized questions from external sources.
One-to-one interviews – Private discussions with board members.
Group discussions – Facilitated conversations among directors.

Question 25

What are the disclosure requirements when a listed company conducts a board evaluation using an external facilitator?

Answer 25

According to Governance Code provision 23, if a listed company conducts a board evaluation using an external facilitator, the following details must be included in the annual report: Identity of the external facilitator – The name of the firm or individual conducting the evaluation must be disclosed. Connections to the company – Any past or present relationships between the facilitator and the company must be declared to ensure independence and transparency.

Question 26

What are the advantages of an externally facilitated board evaluation?

Answer 26

Greater objectivity – External facilitators are more independent and free from internal pressures. Increased openness – Directors may feel more comfortable speaking candidly with an independent third party. Expertise and experience – External evaluators are typically highly skilled in conducting board evaluations. Dedicated time commitment – External facilitators can fully focus on the evaluation process. Higher credibility – Stakeholders are more likely to trust the findings of an independent assessment.

Question 27

What are the disadvantages of an externally facilitated board evaluation?

Answer 27

Lack of familiarity – External evaluators may not have deep knowledge of the company's culture, objectives, or operations. Cost implications – External evaluations can be expensive compared to internal reviews. Reluctance to engage – Some directors may feel uncomfortable discussing their own performance with an outsider.

Question 28

What methods can be used in an externally facilitated board evaluation?

Answer 28

External evaluations can include: Bespoke questionnaires – Tailored to the company’s specific needs. Third-party question banks – Standardized questions from professional sources. One-to-one interviews – Private discussions with board members. Group discussions – Facilitated sessions for broader insights. Observation of board/committee meetings – Assessing boardroom dynamics and interactions. Review of board packs/meeting materials – Evaluating the quality of governance documentation.

Question 29

What was the purpose of the CGI’s 2018 review on board evaluation in UK listed companies?

Answer 29

The Department of Business, Energy and Industrial Strategy (BEIS) commissioned the CGI to assess the quality of independent board evaluations and propose ways to improve them. The final report, published in January 2021, included 15 recommendations aimed at enhancing board performance reviews, increasing transparency, and strengthening accountability.

Question 30

What key recommendations were made in the 2021 report?

Answer 30

erminology Change – The FRC should consider replacing the term "board evaluation" with "board performance review" in the UK Corporate Governance Code. Dual Accountability – Any improvements in board reviews should apply to both companies and external reviewers and should, at least initially, remain voluntary. Code of Practice for Board Reviewers – A formal Code of Practice should be introduced for organisations conducting board reviews for FTSE 350 companies, either issued by BEIS or another designated body. Voluntary Best Practices for Companies – Listed companies should voluntarily adopt good practice principles for selecting external reviewers and ensuring transparent review processes. Enhanced FRC Guidance – The FRC should issue additional voluntary guidance on reporting against Provisions 21 and 23 of the 2018 UK Corporate Governance Code. Defining Independent Reviews – The Code of Practice should not prescribe methodologies but should exclude firms that merely provide software tools for internal reviews. Managing Conflicts of Interest – Both companies and reviewers should clearly explain how they manage conflicts of interest, particularly in cases of long-term reviewer relationships or high financial dependence on fees. FRC Monitoring – The Financial Reporting Council (FRC) should regularly assess board performance review practices and reporting within the listed sector as part of its ongoing monitoring of the UK Corporate Governance Code. BEIS Formal Review – The Department of Business, Energy and Industrial Strategy (BEIS) should conduct or commission a formal review of the impact of these measures three years after the proposed register of board reviewers becomes operational. The register of board reviewers is designed to track and certify firms that provide external evaluations of boards, ensuring quality control and professional standards in the board evaluation process.

Question 31

What do Provisions 21 and 23 of the UK Corporate Governance Code entail, and why are they relevant to board evaluations?

Answer 31

Provision 21 of the UK Corporate Governance Code: This provision recommends that listed company boards should undertake an annual, formal, and rigorous evaluation of their performance, including that of their committees and individual directors. The evaluation should focus on both the effectiveness of the board in its collective roles and the performance of individual directors. The process should be transparent and ensure that any areas for improvement are addressed. Provision 23 of the UK Corporate Governance Code: This provision outlines that boards of FTSE 350 companies should ensure that the findings and recommendations from the board evaluation are reported in the next annual report. It should also include details on how the findings were implemented and whether any improvements were made in the board's structure, processes, or governance. The evaluation process should be overseen by the chair and should include an independent element (i.e., an external facilitator) at least once every three years. Relevance These provisions are essential because they: Ensure Accountability and Transparency – They help companies provide stakeholders with an insight into how well the board is performing, what improvements are necessary, and what actions are taken based on the evaluation results. Promote Effective Governance – By evaluating board performance regularly, companies are encouraged to stay aligned with good governance practices and adjust their structures and processes to adapt to evolving challenges. Boost Credibility with Stakeholders – Clear reporting and action on board evaluations enhance the credibility of a company’s governance in the eyes of investors, regulators, and other external stakeholders.

Question 32

Which companies are required to undertake board evaluation?

Answer 32

All listed companies.

Question 33

Which companies must carry out external facilitated board evaluation and how often?

Answer 33

FTSE350 companies - at least once every three years.

Question 34

Who should evaluate the performance of the company chair?

Answer 34

The NEDs led by the senior INED.

Question 35

What is the process for appointing directors, and what steps should be taken once they are appointed, particularly in their first directorship?

Answer 35

When appointing a director, especially for their first directorship, it is typically based on their merit, which may be determined by their technical skills or entrepreneurial experience. Directors of standalone private companies may only have this single directorship, while directors of small groups may be appointed to subsidiaries within the group. Some directors may also actively seek non-executive appointments with other companies, especially those looking to gain experience for future succession planning. For those newly appointed, whether to their first directorship or as an additional role, it is crucial to undergo an induction process. This process ensures that directors are well-informed about their new roles and the company’s operations. Additionally, they should receive continuous professional development (CPD) updates throughout their tenure. The form and content of the induction and CPD will vary depending on factors like the director's experience, the company's size, the regulatory framework it operates within, and whether the company is publicly listed. Key Steps After Appointment: Induction Process – To familiarize the director with their role, the company’s operations, and governance practices. CPD (Continuous Professional Development) – Ongoing education to keep directors updated on industry trends, regulations, and best practices.

Question 36

What should an induction process for a new director include, and how should it be tailored?

Answer 36

Upon appointment, all directors should undergo an induction programme tailored to their individual experience and their knowledge of both the company and the industry in which it operates. For directors of listed companies, the induction must also cover the additional responsibilities specific to listed company directors, including the disclosure and transparency rules they must comply with. A well-structured induction ensures that new directors are able to contribute effectively from the start of their tenure. It is crucial that the induction is not a one-size-fits-all exercise. Instead, it should be customized based on: The individual's prior experience (e.g., if they are new to being a director or have previous directorship experience). Specific areas of the company or industry that the director may need more information on. The director’s needs for further training on areas such as their legal duties and responsibilities. Even if they have been a director before, they may not be familiar with the company-specific aspects or may need a refresher on their duties. Suggested Checklist for Induction Programme: Overview of the company: Structure, governance, operations, financials, and strategy. Role of a director: Specific duties, powers, and responsibilities. Responsibilities of a listed company director: Disclosure rules, transparency requirements, and regulatory obligations. Industry and sector overview: Key trends, challenges, and opportunities. Specific training needs: Based on the director's requests or areas where they feel less knowledgeable. By having a personalized induction, the company ensures that the director has a strong start and is well-prepared for their role.

Question 37

What is a suggested checklist for the induction programme of a newly appointed director in a listed company?

Answer 37

The induction process for a newly appointed director in a listed company should cover the following key areas to ensure they understand their role, the company’s operations, and relevant rules and regulations. The checklist below outlines the essential components of the induction: 1. The Role of a Director Introduction to the role of a director: Understanding the director's rights, duties, and responsibilities. Share dealing policy: Details of how transactions are to be reported, including notification to the UK Listing Authority (UKLA) and informing connected parties. Support roles: Information on key individuals like the company secretary, general counsel, and access to external advice. Relevant policies: Policies regarding professional advice, expenses, data protection, and reporting of gifts and hospitality. Liability protection: Details on directors’ and officers’ liability insurance and indemnity deeds. Personal development: Information on personal development and training opportunities. Board meeting protocols: Procedures, dress code, and expectations for board meetings, general meetings, staff events, etc. Restrictions: Any restrictions on outside interests (e.g., taking up other directorships). 2. Rules, Regulation, and Guidance Unitary board structure: An overview of the board structure and governance. Company’s Articles: An up-to-date copy of the company’s Articles of Association and any unusual features. Listing and disclosure rules: Overview of the UKLA's rules and other jurisdictional requirements. Corporate Governance Code: A summary of the UK Corporate Governance Code and best practices. Investors' guidelines: Details of any investors’ corporate governance guidelines the company follows. 3. Operation of the Board Board composition: Details of board and committee structure, reserved matters, delegation of authority, and succession planning. Committee membership: Board committees’ membership and terms of reference. Board meetings: Copies of minutes from the last 12 months, dates for upcoming meetings, and pro forma agendas. Training on board processes: Use of board portals, agenda delivery, and paper submission processes. Chair's expectations: Explanation of the chair’s expectations on output and behavior. Corporate culture: Summary of the company’s values, codes of conduct, and ethical standards. 4. Business Background Company overview: Introduction to the company’s history, structure, subsidiaries, joint ventures, and major events. Business model: Understanding the company's business model, products, services, mission, and key markets. Market performance: Analysis of market share, trading performance, and current challenges. Annual reports: Review of previous annual reports, interim reports, and supporting materials. 5. Running the Business Key personnel: Introduction to key executives and their roles, as well as important contacts. Professional advisers: Understanding how external advisers work with the board. Key policies: Overview of health, safety, environmental management, risk management, and internal control procedures. Company performance: Current performance, budgets, key performance indicators, financial position, and treasury issues. Risk management: Risk tolerance, internal controls, disaster recovery plans, and significant litigation. Sustainability: The company’s sustainability policies, performance, and environmental targets. Third-party relationships: Investor relations policy, major shareholders, advisers, and key customers and suppliers. 6. Practical Issues Premises and facilities: Information on the office layout, parking, building access, Wi-Fi, and support services. Contact details: Useful contacts within the company, phone numbers, email addresses, and how to access company support services. Remuneration: Information on fees, remuneration, expenses, and how to reclaim them. 7. Executive Role (if applicable) Executive duties: If the director is taking on an executive role, an outline of their key responsibilities and personnel they will interact with. This comprehensive checklist ensures that a new director is adequately prepared and well-equipped with the necessary knowledge to contribute effectively to the company’s governance.

Question 38

What is the role of continuous professional development (CPD) in the induction and ongoing education of directors?

Answer 38

Continuous professional development (CPD) is an ongoing process that begins with the induction of new directors and continues throughout their tenure. It helps directors stay updated with the latest developments in legislation, regulatory requirements, technology, and governance practices.

Question 39

Key points on CPD for directors:

Answer 39

Induction as the Start of CPD: The induction process should serve as the foundation of a continuous programme of education and updates for directors. Induction provides the necessary initial information about the company's operations, governance, and responsibilities. However, ongoing education is critical to ensure that directors remain informed about changes and developments during their time on the board. Various Formats for Updates: CPD for directors is delivered in a variety of formats, including: Written and verbal board briefings Formal briefing notes Board presentations (internal and external) Keeping Knowledge Current: CPD ensures that directors’ knowledge and skills remain up to date. It helps them address gaps in their knowledge, especially when new legislation, regulatory requirements, or technologies are introduced that could impact the business or its governance. Responsibility for Briefings: Compliance and governance briefings: These are typically managed by the company secretary to ensure the board is aware of any changes in governance codes, regulations, or legal obligations. Company and industry briefings: These are provided by the appropriate executive director or senior management to update the board on the company’s performance, strategy, and any relevant industry trends. Staggered Approach to Avoid Overload: A staggered approach to CPD is recommended, rather than concentrating all briefings into one or two sessions per year. A steady, ongoing flow of information throughout the year prevents directors from becoming overwhelmed and ensures that they can effectively absorb and apply the information. CPD is essential for directors to maintain their effectiveness and ensure they remain informed about the company’s operations and external changes. This process is part of a broader commitment to good governance and compliance. Regular and well-paced briefings will help directors stay up to date without overwhelming them.

Question 40

What role do external seminars and webinars play in the ongoing education of directors, particularly committee chairs?

Answer 40

In addition to internal briefings, directors, especially committee chairs, should be encouraged to attend relevant external seminars and webinars. These events help directors stay informed about legislative and regulatory developments and the evolving reporting preferences of investors. This external learning complements internal briefings and enhances their understanding of broader trends and best practices in governance.

Question 41

Key Points on External Education for Directors:

Answer 41

Encouragement to Attend Seminars/Webinars: Directors, particularly those in leadership roles like committee chairs, should be actively encouraged to attend relevant seminars and webinars. These events provide insights into emerging trends, best practices, and regulatory changes that might affect the company's operations, governance, and strategic direction. Benefits for Committee Chairs: Committee chairs often have more specific responsibilities, such as overseeing audit, remuneration, or risk committees. Attending external seminars and webinars allows them to gain: Updated knowledge on legislative and regulatory developments Awareness of evolving investor preferences related to reporting and governance Insights into the workings of other committees or boards, providing a broader perspective on governance practices Staying Up to Date: External events help directors stay ahead of regulatory and legislative changes that may directly affect their responsibilities. These events are particularly useful for understanding: New regulations impacting the company’s sector Changes in corporate governance practices recommended by regulators or investors Emerging trends in shareholder and investor expectations Enhanced Investor Communication: By attending these seminars and webinars, directors, especially those in committee chair roles, become better equipped to align their committees with the reporting preferences of investors, enhancing transparency and communication. In Summary: Directors, particularly committee chairs, should attend relevant external seminars and webinars to complement internal briefings and enhance their understanding of regulatory changes and investor expectations. This ensures that they remain effective in their roles and can better guide the company’s governance and reporting practices.

Question 42

When should directors receive induction training?

Answer 42

Shortly after appointment.

Question 43

Is it necessary for experienced directors to receive induction training?

Answer 43

Yes, as all companies have different processes.

Question 44

Is it better for directors to receive training all in one session or spread out during the year?

Answer 44

It is better to drip feed the updates rather than overload them with information in one session.

Question 45

What does the Governance Code recommend regarding board policies and their adoption?

Answer 45

The Governance Code recommends that boards formally adopt written policies covering key governance matters. These policies are designed to ensure there is a clear division of responsibilities between the board as a whole, the executive team, the CEO and chair, and the responsibilities delegated to the various board committees.

Question 46

How should these governance policies be managed and reviewed?

Answer 46

The governance policies should be formally adopted by the board and periodically reviewed by the company secretary. The company secretary, in consultation with the chair or relevant directors, should prepare amendments to these policies for the board to review and approve.

Question 47

Where can companies find examples of these policies and terms of reference?

Answer 47

The CGI (Corporate Governance Institute) publishes examples of many of these policies and terms of reference on its website (www.cgi.org.uk).

Question 48

What is required of listed companies under the UK Corporate Governance Code?

Answer 48

Listed companies are required under the UK Corporate Governance Code to make terms of reference available for inspection. These terms of reference, along with the matters that are reserved to the board, are typically found on the company’s website.

Question 49

Summary of Key Governance Policies and Practices

Answer 49

1. Matters Reserved to the Board Authority Limits: The board should clearly define authority limits for directors and executive management to ensure decisions are appropriately allocated. This should include monetary limits, contract duration, and types of contracts that require board approval. Code of Conduct: Directors should adhere to a code of conduct covering personal behavior, conflicts of interest, confidentiality, and other matters. The company may have different codes of conduct for varying employee levels, but they should reflect the corporate values and culture. Tenure Policy for Non-Executive Directors (NEDs): While there's no statutory maximum tenure for directors, the Governance Code deems a non-executive director no longer independent after nine years. Some bodies advocate for even shorter tenures to refresh boards, especially with rapid technological changes. However, board continuity should be balanced with refreshing perspectives. Expense Policy: The company should have a comprehensive expenses policy that applies to all employees, including directors. This policy should specify what expenses can be claimed, the process for claims, and required authorizations. Independence Standards for Independent NEDs: NEDs should maintain independence from the executive team, and the Governance Code outlines conditions under which NEDs may lose their independence. For example, NEDs with significant business relationships or long tenures (over nine years) may not be considered independent. Committee Terms of Reference: Boards must establish clear terms of reference for any committee, outlining its duties, composition, reporting requirements, and authority. Listed companies typically have standing committees, such as audit, remuneration, and nomination, along with other specialized committees based on the company’s needs. Share Dealing Policy: Companies must comply with the Market Abuse Regulation (MAR) regarding share dealing. A formal share dealing policy should set procedures for employees requesting clearance to trade in the company’s shares and notify the company and the FCA about trades. Whistle-blowing Policy: A whistle-blowing policy encourages employees to report misconduct, illegal acts, or failures to act. For listed companies, the Governance Code mandates the board review whistle-blowing arrangements and ensure independent investigations. Companies in regulated sectors should have specific arrangements for handling disclosures and protecting whistle-blowers from retaliation. Risk Management Policy A Risk Management Policy is an essential governance tool for supporting the company’s corporate strategy. The identification, classification, and mitigation of both strategic and systemic risks should be central to every company’s management processes. Listed companies are required to disclose principal risks and uncertainties in their annual reports and the measures they have taken to mitigate them. Additionally, it is good practice for boards to define their 'risk appetite', which refers to the nature and extent of risks the company is willing to take in pursuit of its long-term strategic objectives. This concept is outlined in Code Principle O. An enterprise-wide approach to risk management allows an organization to evaluate the potential impact of risks across all processes, activities, stakeholders, products, and services. Implementing a comprehensive risk management approach helps the company unlock the benefits of well-understood and managed risks. A Risk Management Policy should include the following elements: Risk Identification: Internal risks External risks Systemic risks Strategic risks Assessing the Impact of Risk: Avoid high-impact risks by refraining from certain activities. Rate risks based on their impact and probability. Developing Risk Mitigation Strategies: Understand risks and develop strategies to reduce either the impact or the probability of their occurrence (or both). Implementing Risk Mitigation: Execute the risk reduction strategies, which could involve transferring risks through insurance, joint ventures, or ring-fencing. Reviewing the Effect of Mitigation: Ensure the resulting risks are acceptable for the time being. The review of the mitigation process marks the beginning of the next cycle of identifying new risks and implementing solutions. By establishing a robust risk management framework, the company not only ensures regulatory compliance but also enhances its ability to manage and mitigate risks effectively, safeguarding its long-term strategic goals. These policies are integral to effective governance, providing clear boundaries for decision-making, maintaining transparency, promoting ethical conduct, and managing risk in a way that aligns with the company’s overall strategy. These policies are designed to ensure that boards are operating transparently, maintain a clear separation of powers between the executive and non-executive functions, and promote a healthy, ethical work environment. They also help to safeguard against conflicts of interest and ensure that the board's decisions are made responsibly and in line with best governance practices.

Question 50

Why should board committees have written terms of reference?

Answer 50

To ensure there are clear objectives, authority and parameters for the matters delegated to them.

Question 51

Who is responsible for notifying the FCA where a PDMR deals in the company’s shares?

Answer 51

The PDMR but often delegated to the CoSec.

Question 52

Can an employer legally sack a whistle-blower for blowing the whistle?

Answer 52

No.