The changing face of risk management - includes related article on information sources for internal auditors and information technology planning

Internal Auditor,  Oct, 1998  

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One of the most significant changes noted by researchers is the one-year increase in the percentage of large companies with nominating committees - from 48 percent to 85 percent. In addition, the number of large organizations with compensation committees has grown from 69 percent in 1997 to 88 percent today; in small to mid-sized companies, that number has increased from 84 to 95 percent.

While the Grant Thorton survey affirms that individual companies are making significant strides in corporate governance, international standard setters charged with developing a global governance framework are experiencing a rockier ride. A recent meeting of the International Corporate Governance Network (ICGN) underscored the huge difficulties associated with generating a code of corporate governance practices applicable across national borders. The Network, which was established to improve worldwide standards of business management, rejected a proposed statement of global corporate governance principles at its third annual meeting in San Francisco.

Several speakers attacked the proposed statement for being overly influenced by U.S. concepts and failing to consider international differences, such as the European practice of maintaining an executive management board that is separate from the board of directors. Concern was also voiced over the proliferation of corporate governance principles from various bodies worldwide. Some delegates suggested that, instead of drawing up its own statement, the ICGN should work with the Organization for Economic Cooperation and Development, which released a report on global principles of corporate governance earlier this year.

Despite these challenges, the group did agree on a skeleton version of the statement, which contains seven principles covering broad areas of consensus ranging from disclosure of information and equal treatment of shareholders to protecting the environment. One principle calls for companies to make it easier for international investors to vote on company resolutions by providing adequate notice that a vote will be taken; supplying translations of meeting agendas; and allowing voters to cast their ballots by fax and e-mail when possible.

The conference also confirmed the growing worldwide acceptance of the relationship between corporate governance and business success. Tadao Suzuki from the Corporate Governance Committee of Japan presented his group's statement of principles, which is being considered for inclusion in Japanese stock market listing requirements. Linda Tsao Yang, U.S. ambassador to the Asian Development Bank, told the conference that much of the current economic difficulties in Asia could be viewed as a failure of corporate governance. And Philippe Jaffre, chairman and chief executive of the French oil company Elf Aquitaine, noted that French investors and managers were "starting to believe" in the need for corporate governance based on the principles of shareholder value.

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