by Matthew A. Struck, CPCU, ARM – November 27, 2017

“There never is a good time for tough decisions. There will always be an election or something else. You have to pick courage and do it. Governance is about making tough, even unpopular, decisions.” – Jairam Ramesh

Governance refers to the way a corporation or organization is governed. It is the technique by which organizations are directed and managed. Good governance is essential to develop added value to all of the stakeholders of an organization.

What are the Benefits of Good Governance?
  • Organizational Growth and Success
  • Lowers the Cost of Operating
  • Minimizes Waste, Corruption, & Mismanagement
  • Improved Reputation
  • Fewer Fines, Penalties, & Lawsuits
  • Decreased Conflicts and Fraud
Examples of Governance Failures 
  • Enron – unethical practices, improper financials, and illegal loans contributed to the failure of a $111 Billion company
  • Lehman Brothers – lack of risk management, extremely high amounts of leverage, and directors acted on their own behalf and not those of the stakeholders (shareholders, employees, and customers)
  • Volkswagen emissions scandal – concerted effort to skirt or break governmental regulations (EPA emissions standards)
  • Federal Employment Guidance Service (FEGS) of NYC – board members unfamiliar with nonprofit accounting practices and failed government audits led to the failure of a $250 million not-for-profit agency
Best Practices for Achieving Good Governance
  • Diversified board of directors with a wide range of expertise…and evaluate their efforts
  • Appointment of non-employee/executive directors to the board
  • Define roles, responsibilities, and accountabilities
  • Commit to abide by all applicable regulations and laws
  • Tie compensation to performance
  • Audit Committees
  • Commit to making decisions from a position of good risk management
Additional Resources

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*Treadstone Risk Management is an insurance broker and risk manager. We are not attorneys. Always seek legal counsel when changing/implementing any policies and procedures. Include your broker/risk manager in the process.
**If you have any questions regarding insurance program structures, coverage concerns, or alternate insurance options, please visit www.treadstonerisk.com, follow Treadstone Risk Management on LinkedIn, on Twitter @TreadstoneRisk, on Facebook, on Youtube, or email mstruck@treadstonerisk.com.

Treadstone Risk Management LLC was founded by two experienced insurance professionals who share a vision of providing the highest level of service and professional expertise to public and private sector Property & Casualty insurance clientele. Treadstone has identified a need in the insurance brokerage and risk management industry for an agency whose personnel possess the highest level of industry education, training, and experience. We pride ourselves on our ability to deploy those skills collectively through premier customer service and attention.