Corporate Oversight and Stakeholder Lines of Defense

The Conference Board Executive Action Report, No. 365, October 2011

10 Pages Posted: 13 Oct 2011

Date Written: October 11, 2011

Abstract

The financial crisis of 2008 and the resulting economic recession have cruelly exposed weaknesses in corporate oversight at all levels – organizational, sector, national, and international. Consequently stakeholders are now demanding higher standards of corporate oversight to provide them with greater protection and assurances going forward. Such stakeholder scrutiny has prompted those with corporate oversight responsibility and accountability to critically review their own oversight roles and has led to increased consideration of how these oversight roles might function more effectively. In order to adequately safeguard stakeholder interests certain critical activities need to be managed throughout the enterprise, at strategic, tactical, and operational levels. These critical activities include the management of governance, risk, compliance, intelligence, security, resilience, controls and assurance. To gain a measure of comfort that these critical activities are being appropriately addressed, stakeholders commonly rely on various lines of defense to be in place and to operate as oversight layers within the organizations themselves. Internal Lines of Defense

- Operational Line Management - Tactical Oversight Functions - Independent Internal Assurance - Executive Management - Board of Directors Stakeholders may also rely on additional external lines of defense in the event that the organization itself fails in its obligations to its stakeholders.

External Lines of Defense

- External Auditors - Shareholders - Rating Agencies - Regulators This report focuses on these stakeholders lines of defense which are at the heart of effective corporate oversight.

Keywords: corporate, oversight, defense, governance, risk, compliance, intelligence, security, resilience, controls, assurance

JEL Classification: G3, G30, G34, G39, M14

Suggested Citation

Lyons, Sean, Corporate Oversight and Stakeholder Lines of Defense (October 11, 2011). The Conference Board Executive Action Report, No. 365, October 2011, Available at SSRN: https://ssrn.com/abstract=1938360

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