Lawrence Jim B. Bayubay BPA2 Learning Module No.

8
Corporate Governance and Date: March 15, 2021
Social Responsibility
I. Learning Activities
Direction: Answer the following comprehensively. 20 points
1. What role does executive compensation play in risk-taking and accountability?
(ANSWER)
Executive Compensation linked to performance plays a huge role in risk
taking and accountability. The way they give their best to perform in return, they got
more reward. This reward is linked to the value of the deals that are brokered. In an
effort to achieve a essential rewards, the deals offered become more risky to the
investor, especially if such a deal gives higher brokerage. And Investors are urged to
take theses deals - which are best for them when in fact they serve the purposes of
broker. After all things are finalized and when the investor realizes that his gains are
not as rosy as promised, they withdraw the money or lose it completely.

2. What role do shareholders and other investors play in corporate governance?

How can investors effect.
(ANSWER)
Shareholder plays an active role in corporate governance in articulating the
situations with respect to executive decision making and company strategy. A share
holder can vote in important situations thus participating in making decisions
regarding company policies and management of the firm. Shareholders have become
increasingly willing to take a stand to encourage companies to transfom socially and
to look beyond financial returns of the firm.

On the other hand, the role of investors is a more general term for any
individual or organization that provides capital to a firm investments which include
financial, human, and intellectual capital. Investors play a major and vital role in the
success and growth of a company. Because of that fact, its of the utmost importance
for companies to maintain strong, transparent relationships with investors. This is
where the investor relations department of a company comes into play. Thus, it is
important for businesses to communicate effectively and honestly with investors.
II. ENRICHMENT ACTIVITIES

III. 1. Why are the internal control and risk management important in corporate
governance? Describe three approaches organizations to take in managing risk.
(ANSWER)
Because to have Internal Controls safeguard corporate assets and resources,
protect reliability of organization information, and ensure compliance with regulations
and laws, and contracts. Whereas the Risk management is the process used to
anticipate and shield the organization from unnecessary or overwhelming
circumstances, while ensuring that executive leadership`s taking the approriate steps
to move the organization and its strategy forward.
There are three ways to describe how risk poses either a potentially
negative or positive concern for organizations. First, risk can be catigorized as a
hazard. In this approach, risk management is focused on minimizing negative
situations, such as fraud, injury or financial loss. Second approach, risk may be
considered an uncertainty that needs to be hedged through quantitative plans and
models. This type of risk is best assoaciated with the term risk management, which
is used in financial and business literature. Third, risk also creates the opportunity for
innovation and enterpreneurship.