Corporate risk taking and monitoring remains the most crucial factor of consideration by the boards of directors, the media, and legislators because they contribute to the financial stability of a corporation. An organization whose board fails to manage risks properly creates a major threat to the employees and clients. In addition, a corporation should maintain an effective internal control in order to allow a customized system of governance. Baker Hughes has a rigorous corporate governance system. Its program requires all the staff members to comply with the rules and regulations, in addition to company’s core values of integrity, performance, and teamwork. Baker Hughes however, has poor internal controls based on the manner in which her staff performs their duties. The case of the former Baker Hughes employee filing a case against the company clearly shows that the company never upholds its internal controls. If an employee termination could occur for failing to participate in a corruption scheme, it is a clear indication that the company’s board does concentrate on maintaining a good reputation for the corporation.
Senior management role in preventing the issue
The senior management had all it takes to prevent the following issue from taking place because they are have the mandate to control all activities of the company employees. The company undertakes comprehensive employees’ training programs that cover substantially every employee, which guides them on how to maintain the good name of the company. The senior management is responsible for all activities taking place in the company, which also shows that they were involved in the corruption process. In addition, they implement risk management policies and procedures designed by the board of directors. On the other hand, the company management reacted in a manner to suggest that they were not concerned about the wellbeing of the employee and went ahead to hire a private investigator to the case.
Baker Hughes’ board of directors responsibility
Baker Hughes board of directors should have taken responsibility because they oversee the overall performance of the company. The board also has the authority to command the senior management to investigate the issue and bring to book the involved individuals. In addition, the board of directors could have taken responsibility through conducting an internal analysis of various practices taking place in the organization, for example, the corruption cases. The board oversees the overall operation of the company, and should always enquire from the senior executives on any allegations and bad practices taking place inside the company.
Wachtell law on board responsibility
According to Watchtell Law Firm, the board of directors in corporate risk management is to ensure the risk management policies and the company’s senior executives implement procedures through the board’s oversight roles. In addition, the board should ensure risk managers follow the company’s corporate strategy. Under the above case, board of directors was responsible for establishing that the company boss and senior executives fully engage in risk management practices.
Wachtell perspectives for the board and the apparent risk management structure at Goldman Sachs
Watchtell perspective for the board compare with the apparent risk management structure at Goldman Sachs because of the following reasons. Firstly, following the Watchtell law the board does not involve in day-today risk management activities. Similarly, the Goldman Sach’s risk management structure represents the board of directors and board of committees with the corporate oversight responsibility, but no direct involvement in risk management implementations. Secondly, Watchtell perspective requires that the company review the risk management practices with internal auditors while the Goldman Sach’s risk management framework indicates a direct connection between the boards and the internal auditor.