South Africa’s companies can expect increasing focus to be placed on the role of the board, and its effectiveness in executing its responsibilities, in the wake of the recent economic uncertainty, warns professional services firm, PwC.
Regulators, industry watchdog groups and interested shareholders will make corporate governance a priority on the board’s agenda in years to come, says PwC corporate governance centre leader Anton van Wyk.
“Therefore the board will need to take more responsibility for scrutinising management’s actions, closely reviewing executive remuneration and supporting management’s actions in a number of operational issues,” he said.
A company’s reputation can also suffer from technology-related problems. Van Wyk says that savvy directors understand that crisis management has changed with the advent of globalisation and technological developments.
He said that directors will need to ensure that information technology (IT) governance becomes part of their agenda in order to monitor internal control frameworks.
“This is a new expanded area for corporate governance in South Africa. More resources and time will be required to address this issue. IT governance will have an effect on the risk management, assurance and reporting frameworks of a company.”
Although social media and other emerging technologies do have benefits for organisations, they also have major risks. Companies will need to consider implementing a strategic programme to capitalise on such emerging technologies, PwC said.
Van Wyk continued, saying it is also important for boards to give reliable financial information to shareholders. The recent economic uncertainty has placed more focus on the leadership, integrity and the responsibility of boards.
To the extent that the company’s stakeholders are tracking the organisation’s performance on environment, employee, product, or other issues, the board should be aware of the key messages management delivers and how management assures that information is reliable.