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Governance, Risk, Audit & Privacy · Foundational

Corporate Governance

The system of rules, practices, and processes by which a board directs and controls an organization on behalf of stakeholders.

Definition

Corporate governance defines the relationships among the board, management, shareholders, and other stakeholders, establishing how objectives are set, how performance is monitored, and how accountability is enforced. IT governance and information security governance derive from it. Frameworks such as the OECD Principles and laws such as SOX shape corporate governance expectations.

Example

An audit committee of independent directors oversees external auditor selection and internal control reporting.

Exam tip

If a question asks who is ultimately accountable for governance, choose the board of directors.

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