Monitoring Health, Performance, and Risk
How a board goes about its monitoring function has a big impact on the business. The board’s approach to monitoring sends important signals to management. If the board solely ensures regulatory and legal compliance and digs into minutiae, management tends to focus on details and reporting requirements. If, on the other hand, the board broadens its monitoring role to include an assessment of the drivers of business health, it helps management be more forward looking and focused on critical issues. The board’s monitoring can then add significant value.
Along with ensuring compliance, the board should periodically assess whether management is preserving the company’s financial health, getting ...