Future Corporate Governance

"I have been invited to share the stage with distinguishing industry leader in the Future Corporate Governance Conference at the Dubai Government Excellence Week to share my thoughts on Corporate Governance."

I was delighted to share the stage with distinguished industry leader Abdulaziz Abalkhail, Director General of Ministry of Defence, Saudi Arabia (Center) and Tomell de Silva Ceaser, Head of Compliance Careem/Uber ME, UAE (Right) to discuss the topic of Corporate Governance Excellence in Entities.

Below are my key thoughts on the questions raised during the Fireside Chat:

What is Corporate Governance (CG) accordingly to you?

In simple terms, CG stipulates how effectively we run the business in an ethical manner. It could be through different codes (guidelines) either adopted voluntarily as a best practice or involuntarily imposed through government legislation.

How do we know which best practice to follow in term of CG in our company?

CG is a relatively new area in comparison to other business areas and got is prominence in the recent past due to major fraud scandals happen in a different part of the world. Unfortunately, these scandals have one thing in common that the management as part of the wrongdoing. In order, to overcome the agency problem (principle/agent relationship) certain rules and regulations were made. Initially the CG practice we least regulated by the law but after seeing big corporation falling, the government and regulatory body intervene to enforce through legislation and the classic example is SOX. The use of right CG practice based on several variables such as company legal set-up e.g. limited liability, private joint-stock or public joint stock etc., industry norms, market practice etc.

What are the key main components of the strong governance framework within any company?

In my opinion, the strong CG framework does not only reflect through compliance with the code but to live with the basic fundamental of doing the right thing. A company strong risk culture, control environment and above all tone at the top to encourage, motivate and enforce the ethical work culture within the organization could only lead to an effective resilient control environment.

Why so many companies fail in combating the wrongdoing despite proclaiming effective governance mechanism within the organization.

Most of the wrong dong happen due to human greed. It is very difficult to combat that because the basic premise of the organization formation is based on the maximization of profit. Now, a lot of effort is being made to promote ethical and sustainable business. It’s a journey and the current CG practice is a step in the right direction.

How will you conclude the discussion on CG?

I will summaries my talk by saying, do not think that the Board members know everything, sometimes it is the job of the second and third line of defense to pitch the right practice. The culture of the organization matters a lot. The culture set from the top, if the tone at the top is not effective, more and more wrong are expected to befall in the corporate practice. Last but not least, the organization and the Board should not only focus on compliance as a tick box approach but live by the true spirit of doing the right thing in any given circumstances. 

ABOUT THE AUTHOR

The Arif Zaman brings with more than a decade of proven experience in internal audit, risk management, and corporate governance. He is the Head of Internal Audit at Private Joint Stock Company based in Dubai, UAE. He holds MSc in Professional Accountancy from the University of London and BSc Hons in Applied Accounting from Oxford Brookes University along with an impressive set of professional certification including ACCA, CIA, CISA, CFE, CCSA, CRMA, CRBA, CPA and CGA etc.

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