Policies set by the Board are first and foremost an articulation by the board of its strategic intent regarding that particular policy topic.
Well thought out and clearly documented policies will provide:
- a set of behavioural principles which inform and support the desired culture in the business;
- a set of targets and limits which communicate strategy and risk appetite for the business;
- a set of delegated authorities empowering the management and staff, while at the same time clarifying responsibilities and accountabilities; and
- a framework for ongoing communication between company management and the Board.
It is important to separate the Policy from the Process. The former is the responsibility of the Board and should be succinct and on point. It should be formulated on the back of a review of strategic options around the topic and a robust discussion to align the ultimate policy to the business strategy and risk appetite.
As the regulatory rule books continue to expand, with ever more onerous and detailed requirements prescribed, individual policies have been extended. Confusion has arisen between setting the policy and documenting the guidelines and processes necessary to implement the policy.
Processes give effect to the Policy and are the responsibility of management. Policy is not defined by Process but rather informs it.
It may be time to revisit the policies of the company and take the procedures documents out of the boardroom. This may even help to tilt the boardroom balance back towards strategic discussion.
July 2020To discuss any of your Governance needs call Governance Matters on +353 (0)87 6408750 or email your query to email@example.com