ABSTRACT
This chapter takes a broad view of the scope of governance but focuses on delivering firm strategies that have a positive risk-adjusted return. Corporate governance is a simple concept: it is the process whereby investors in a firm assure themselves of a reasonable return. An international survey of institutional investors conducted by McKinsey found they ranked good corporate governance alongside financial performance and most 'had "pulled back" from investing in companies because of their poor corporate governance. Influential stakeholders are more strongly emphasizing the risk component of governance. Risk-driven governance involves continuous examination of risk outcomes through timely reporting to all stakeholders, both in quantitative terms and as qualitative reports on objectives and process improvements. With non-financial criteria guiding investment of 10 per cent of funds under management in the United States (US) it appears they offer positive financial benefits for firms. This seems particularly true of ethics in its dictionary meaning as morally correct or honourable.
