Evaluating Board Performance

Unit 5
 Learning Outcomes
To understand the meaning of Board

To understand how board effectiveness affects

Governance of a Corporate
 MCQ
The governance of corporate has relation with
the governance of corporate?
A. No
B. Yes
C. Can not say
D. None of the above
 MCQ
The governance of corporate has relation with
the governance of corporate?
A. No
B. Yes
C. Can not say
D. None of the above
 Evaluating Board Performance
Board evaluation typically examines these roles
of the Board and the entailing responsibilities,
and assesses how effectively these are fulfilled
by the Board.
The Chairperson's Role.
The evaluation of the performance of the Boards
is essentially an assessment of how the Board
has performed on all these parameters.
 MCQ
Evaluating Board performance means
A. Understanding the composition of board
B. To know the working effectiveness of Board
C. To find the gaps in working of board for
remedial measures
D. All of the above
 MCQ
Evaluating Board performance means
A. Understanding the composition of board
B. To know the working effectiveness of Board
C. To find the gaps in working of board for
remedial measures
D. All of the above
 Evaluating Board Performance
In theory, the board is responsible to the
shareholders and is supposed to
govern a company's management.
But in many instances, the board has become a
servant of the chief executive officer (CEO),
who is typically also the chair of the board.
 Evaluating Board Performance
The role of the board of directors has
increasingly come under scrutiny in light of
corporate scandals such as those at Enron,
WorldCom, and HealthSouth, in which the
directors failed to act in investors' best interests.
 Evaluating Board Performance
• Look at the size of the board and whether it has
enough members to function properly, including
keeping conflicts of interest at bay, or whether
it's too cumbersome and therefore less effective.
• See if the board includes independent outsiders
—experienced business leaders who have no
direct connection to the company, such as a
retired former employee or a relative of a
current executive.
 MCQ
Preferably the board composition should
have----------Directors.
A. Odd numbers say;3,5,7 etc.
B. Even numbers say;2,4,6 etc.
C. Both A & B
D. None of the above
 MCQ
Preferably the board composition should
have----------Directors.
A. Odd numbers say;3,5,7 etc.
B. Even numbers say;2,4,6 etc.
C. Both A & B
D. None of the above
 Evaluating Board Performance
Consider the structure and effectiveness of the
four most critical board committees—executive,
audit, compensation and nominating.
Understand what time constraints and other
responsibilities board members have beyond the
board and determine if there are inherent issues
as a result of these other commitments.
 Evaluating Board Performance
Finally, look at any transactions between the
company, and the executives and directors, and
see if anything raises any red flags by suggesting
a conflict of interest or other problems.
 MCQ
Imagine if Executive Board Committee member
is also a member of audit committee, then what
can happen?
A. Better transparency is guaranteed
B. Better transparency can be at risk
C. For fair view same member should not be
part of same committee
D. Both B & C
 MCQ
Imagine if Executive Board Committee member
is also a member of audit committee, then what
can happen?
A. Better transparency is guaranteed
B. Better transparency can be at risk
C. For fair view same member should not be
part of same committee
D. Both B & C
Economic outlook and business valuation

Climate Change, Water Shortages, Biodiversity

Loss, will have Growing Impacts on Global
Business: UN Report
Adapting to Changing Environment and Seizing
Green Economy Opportunities will Give
Companies Competitive Advantage
 MCQ
The environment of the business is
A. Micro/Internal
B. Macro/External
C. Both A & B
D. None of the above
 MCQ
The environment of the business is
A. Micro/Internal
B. Macro/External
C. Both A & B
D. None of the above
Economic outlook and business valuation

From extreme weather events, to rising pressures

on finite natural resources, changes in the global
environment will increasingly impact operating
costs, markets for products, the availability of
raw materials, and the reputation of businesses,
from finance and tourism, to healthcare and
transport.
Economic outlook and business valuation

While the risks are significant, such

environmental changes also represent major
opportunities for businesses that successfully
manage them, and seize the demand for
sustainable technologies, investments and
services.
 MCQ
The risk of a business also brings new
opportunity!
A. Yes
B. No
 MCQ
The risk of a business also brings new
opportunity!
A. Yes
B. No
 Example
Severe floods in Australia in 2010-11, for
example, resulted in more than US$350 million
in claims to re-insurer Munich Re, which
contributed to a 38 per cent quarterly drop in
profit for the company.
The same period of extreme weather in Australia
contributed to a loss of US$245 million in
earnings by mining group Rio Tinto.
 MCQ
What people think of an organization’s actions is
called:
a) Public image
b) Public visibility
c) Viability
d) Values
 MCQ
What people think of an organization’s actions is
called:
a) Public image
b) Public visibility
c) Viability
d) Values
Ans: a) Public image
 Findings by Sector from GEO-5 for Business

Building and Construction

The sector remains vulnerable to volatility in
energy markets and rises in energy prices due to
the energy-intensive nature of producing steel,
concrete and other materials.
 Findings by Sector from GEO-5 for Business

Chemicals
Chemical production is often water intensive.
Consequently, the sector will face increasing
consumer pressure to be more water-efficient, and
to better manage emissions of chemical waste.
Increased regulations may phase out, or restrict
the use of, certain chemical products. Such
regulations can open up market opportunities to
provide more sustainable alternatives.
 Findings by Sector from GEO-5 for Business

Power
By 2035, global electricity demand could be over
70 percent higher than 2009 levels. More frequent
heat waves associated with climate change may
impact the reliability of the grid. In 2012,
blackouts in Northern India, which were caused
by higher demand due to high temperatures and
low monsoon rains, left hundreds of millions of
people without power for several hours
 MCQ
___ means integrating the domestic economy
with the world economy.
a) Globalization
b) Privatization
c) Liberalization
d) Disinvestment
 MCQ
___ means integrating the domestic economy
with the world economy.
a) Globalization
b) Privatization
c) Liberalization
d) Disinvestment
Ans: (a)
 Findings by Sector from GEO-5 for Business

Finance
Insurers may experience severe capital losses
and reduced profitability if they fail to
adequately identify and plan for climate-related
risks.
 Findings by Sector from GEO-5 for Business

Food and Beverage

High levels of water use and heavy reliance on
ecosystem services render this sector especially
vulnerable to environmental change.
while ocean acidification and higher water temperatures
are thought to be major factors in the degradation of
coral reef ecosystems, which provide nursery grounds
for some commercially important fish species.
New markets are set to open up for more climate-
resilient food varieties.
 Findings by Sector from GEO-5 for Business

Healthcare
Biodiversity loss will limit the discovery of
natural compounds used in new medicines or
traditional remedies. One estimate suggests that
extinctions of certain species mean the Earth is
losing one major drug every two years.
 Findings by Sector from GEO-5 for Business

Information and Communication Technology (ICT)

Data centres use up to 200 times more electricity than
standard office buildings, making ICT companies’
operating costs vulnerable to increases in energy
prices. Electronic waste (e-waste) is the fastest-
growing waste stream in the world. Its proliferation, as
well as concerns about the environmental impacts of
the sourcing of key materials in developing countries
(eg. heavy metals), may lead to increasing consumer
and regulatory pressure on the industry,.
 MCQ
___ refers to the selling of a public sector unit’s
equity in the market.
a) Globalization
b) Liberalization
c) Privatization
d) Disinvestment
 MCQ
___ refers to the selling of a public sector unit’s
equity in the market.
a) Globalization
b) Liberalization
c) Privatization
d) Disinvestment
Ans: d) Disinvestment
 Findings by Sector from GEO-5 for Business

Tourism
Extreme weather events, impacts of climate
change, water scarcity, and declining
biodiversity can make particular destinations
more or less attractive to consumers, thus
impacting market demand for businesses
operating in these locations. Stricter regulations
on some practices (eg. fishing and snorkeling on
coral reefs) may impact niche sectors.
 Findings by Sector from GEO-5 for Business

Transport
Extreme weather could disrupt supply chains and
infrastructure more frequently. Increasing
extreme weather and water scarcity could disrupt
supply chains and infrastructure more frequently.
Regulations in many countries to reduce
greenhouse gas emissions, can increase costs,
shift consumer demand, and influence product
design.
 Link
UNEP’s Global Environment Outlook report
(GEO-5) – launched in 2012 – is available at:
http://www.unep.org/geo/geo5.asp

The United Nations Environment Programme

The United Nations Environment
Programme (UNEP), established in 1972,
addresses environmental issues at the global and
regional level for the United Nations.
 MCQ
The power crisis is understood to be a challenge
of a business. What new business opportunity
can be there from this challenge?
A. Closing the business
B. Reducing the plant utilization capacity
C. Working on alternative renewable sources of
energy like solar energy
D. All of the above
 MCQ
The power crisis is understood to be a challenge
of a business. What new business opportunity
can be there from this challenge?
A. Closing the business
B. Reducing the plant utilization capacity
C. Working on alternative renewable sources
of energy like solar energy
D. All of the above
 MCQ
Match the following

A. WTO I. Provides loans to address the

short- term balance of payment problems
B. RBI II. Multilateral trade negotiating body
C. IMF III. Facilitating lending and
borrowing for reconstruction and development
D. IBRD IV. Central Bank of India
 MCQ
Ans: A- II , B- IV, C- I , D- III