During the current week, we have extensively discussed a specific Enterprise Governance Framework,

summarized by the below graphical representation. You are asked to discuss and explain that
framework, providing examples for each of the 4 important components of the framework.

Enterprise governance can be defined as: “The set of responsibilities and practices exercised by the
board and executive management with the goal of providing strategic direction, ensuring that objectives
are achieved, ascertaining that risks are managed appropriately and verifying that the organisation’s
resources are used responsibly”, Lees (2005).

The Framework as suggested by Fahy et al. (2005), is based on certain key principles that good
governance cannot guarantee success of a company. This framework covers both corporate governance
and business of any organisation and is achieved through the framework, mainly performance,
conformance, corporate responsibility, and people, process and systems. Thus, the governance
framework is a “guidance system composed of standard management practices within the governance
framework designed to suit the organization” (Talbot and Jakeman, 2008, p. 63).

Corporate governance on its own cannot succeed in making organisation successful. Many organisation
misfocus and ended up investing too much in need for wealth creation and stakeholder values while
neglecting strategy and performance issues. There must be balance between “conformance’ and
“performance” as it relates to enterprise governance. Enterprise governance is an overarching
framework where many tools and techniques and best practice fits. Examples include codes on
corporate governance and financial reporting standards.

There are also strong suggestions that conformance is strongly linked to accountability and performance
linked to value creation. Enterprise Governance Framework supports that performance and
conformance are interchangeable. With this in mind, it can be proposed that performance leads to
assurances while conformance lead to the creation of values, however, Fahy et al. (2005) noted that
there is strong evidence that these relationships are vital for achieving stability in capital markets.

Conformance often referred to as “corporate governance” covers issues that are pertaining to board
structures, roles, responsibilities and executive remuneration. Standards can generally address this
dimension, with compliance being subject to assurance. Board also have the advantage to use well-
established oversight mechanisms to ensure that enterprise governance processes are effectively
working (e.g., audit committees). Conformance takes historic views and covers issues such as roles of
Chairmen and CEO’s, composition of board of directors, board committees, assurance and risk
management for compliance.

On the other hand, performance dimension focuses on strategy and value creation. The focus here is to
help boards to make strategic decisions, understand risks and its drivers, identify key points of decision
making
References

Lees, G. (2005). Enterprise Governance. Available at:

https://www.cimaglobal.com/Documents/ImportedDocuments/cid_enterprise_governance__feb08.pdf.
pdf/ (Accessed: 9 May, 2021)

Talbot, J., and M. Jakeman. 2008. Srmbok:

Security risk management body of knowledge.
Riverwood:
Ligare.
Talbot, J., Jakeman, M. (2008) Srmbok: Security risk management body of knowledge. Riverwood: Ligare.
pp.63

Fahy, M., Weiner, A., & Roche, J., 2005. Beyond governance: Creating corporate value through
performance, conformance and responsibility. John Wiley & Sons.