Corporate governance a top priority, say execs

Enterprise governance isn't just a media buzzword, it's a real concern for company leaders.

Eighty-five per cent of senior finance professionals say governance is not a fad and will be on their firms' agenda for at least the next 18 months, according to a recent survey of 147 companies across the UK, the US, France, Germany and the Netherlands.

More than half say the issue is "on the forefront" of their board's agenda.

The research was commissioned by financial systems and tools provider CODA Group.

The survey defines enterprise governance as incorporating three key areas: corporate governance (the monitoring of internal activities and risk management), corporate performance management (ensuring the company creates value for shareholders) and corporate social responsibility (which includes accountability for and transparency of all activities).

The majority of corporate leaders surveyed - 80 per cent - see professional ethics and corporate responsibility as the key components of governance.

The issue is changing how businesses do businesses, with 60 per cent of respondents saying they're making "real and significant changes to business processes" in order to bring about good governance.

It's also modifying how they evaluate themselves. While increasing shareholder value is their top objective, executives name 'softer' values - such as risk, intellectual property, reputation and brand - as "vital components" to financial reporting in the future.

As for who is responsible for implementing governance within a company, CEOs and CFOs take the lead, with 28 per cent each.

In the UK, 38 per cent of businesses put the onus on risk management directors, while in the US 80 per cent of firms make the CFO in charge of governance.

Overall, 19 per cent of all companies surveyed have a dedicated position for risk management.

Accountancies and management consultancies will reap the benefits of this growing interest in governance, according to the survey.

Fifty per cent of companies say they would employ accountancies for help implementing governance strategies.

For assistance with risk management, 46 per cent would hire a management consultancy and 42 per cent an accountancy.

For planning and forecasting solutions, 62 per cent would choose a management consultancy.