How Often Should Your Company Evaluate Corporate Governance Policy?
By Toppan Merrill
1 min read | Industry Insights Insights Home

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Corporate governance policies are updated at least once a year by 64%, with the remainder doing so as needed. A director of risk management whose company updates its policies once a year speaks of the process as something akin to an annual servicing that boosts corporate performance: “Outdated structures tend to affect productivity levels and may increase risks over a period of time. Timely updates would naturally reduce the costs resulting from these increased risks and lack of proactive behavior.”

One respondent explained the rationale for updating policies on an ad hoc basis thus: “Our policies are updated as required, due to internal changes and external influences as well. Personnel changes affect the management and immediate direction of the company, so updates are made to ensure they are up to date. Moreover, political, economic and influencing conditions also prompt decisions for change in policies.”

An annual—or even more frequent—review of policies could be beneficial given that recent history has shown how some issues can rise rapidly into public and investor consciousness, creating the risk that management will be seen as out of touch if they do not react quickly enough. For example, complaints about the issue of executive pay surged a few years ago and have not subsided. Concerns about sexual harassment at work rose even more abruptly when the #MeToo movement took off in October 2017. While the majority of our respondents say their governance frameworks were developed with help from outside consultancies, it is worth noting that such consultants usually build on existing frameworks, rather than throwing them out altogether. This is partly due to how widespread corporate governance frameworks already are in large US and Canadian businesses. Consultancies should therefore be mindful of the long-standing beliefs and principles of the company, which have shaped corporate governance up until that point. However, in some cases, governance policies require dramatic overhaul, especially after a governance crisis. For example, many banks moved to strengthen governance during the global financial crisis a decade ago.

"Outdated structures tend to affect productivity levels and may increase risks over a period of time. Timely updates would naturally reduce the costs resulting from these increased risks and lack of proactive behavior."

 

Director of risk management, travel operator

 

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Toppan Merrill


Toppan Merrill, a leader in financial printing and communication solutions, is part of the Toppan Printing Co., Ltd., the world's leading printing group, headquartered in Tokyo with approximately US$14 billion in annual sales. Toppan Merrill has been a pioneer and trusted partner to the financial, legal and corporate communities for five decades, providing secure, innovative solutions to complex content and communications requirements. Through proactive partnerships, unparalleled expertise, continuous innovation and unmatched service, Toppan Merrill delivers a hassle-free experience for mission-critical content for capital markets transactions, financial reporting and regulatory disclosure filings, and marketing and communications solutions for regulated and non-regulated industries. With global expertise in major capital markets, Toppan Merrill delivers unmatched service around the world.


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