GIA Cert Governance Foundations key terms

The system of rules, practices, and processes by which a company is directed and controlled, balancing the interests of stakeholders such as shareholders, management, customers, and the community.

A concept explaining the relationship between principals (shareholders) and agents (managers), focusing on conflicts of interest and the need for monitoring and incentives to align goals.

A view that a firm should create value for all stakeholders, not just shareholders, considering employees, customers, suppliers, communities, and others affected by its actions.

A perspective suggesting that managers are inherently trustworthy and act as good stewards of company resources, reducing the need for heavy monitoring and aligning with long-term organizational success.

A conflict arising when an agent (e.g., a manager) acts in their own interest rather than the principal's (e.g., shareholder's) best interest, often due to information asymmetry and differing goals.

A situation where one party has more or better information than another, often leading to imbalances in power and potential conflicts of interest in governance.

A group of elected individuals responsible for overseeing the management of a company, setting strategy, and ensuring accountability to shareholders and stakeholders.

A board member who has no material relationship with the company, its management, or its affiliates, ensuring objective judgment and reducing conflicts of interest.

A board member who is not part of the company's executive management team and typically provides independent oversight and strategic guidance.

A board member who is also an employee of the company, typically holding a senior management position, and involved in day-to-day operations.

A smaller group of board members delegated specific responsibilities, such as audit, remuneration, or nomination, to enhance focus and efficiency in governance.

A board committee responsible for overseeing financial reporting, internal controls, and the external audit process, ensuring integrity and compliance.

A board committee that sets and reviews compensation for executives and directors, aligning pay with performance and shareholder interests.

A board committee that identifies and recommends candidates for board positions, ensuring a balanced mix of skills, experience, and diversity.

The leader of the board of directors, responsible for setting agendas, facilitating board meetings, and ensuring effective governance and communication with shareholders.

The highest-ranking executive responsible for managing the company's day-to-day operations and implementing board-approved strategies.

The senior executive responsible for financial planning, record-keeping, and financial reporting, ensuring accuracy and compliance with regulations.

A senior officer responsible for ensuring the company complies with statutory and regulatory requirements and for advising the board on governance matters.

The framework and processes by which an organization identifies, assesses, manages, and monitors risks to achieve its objectives and ensure accountability.

A comprehensive, organization-wide approach to identifying, assessing, and managing risks, integrating risk management into strategy and operations.

Processes and procedures implemented by an organization to safeguard assets, ensure accurate financial reporting, and promote operational efficiency and compliance.

A governance framework that divides risk management and control responsibilities into three lines: operational management, risk and compliance functions, and internal audit.

The process of adhering to laws, regulations, guidelines, and standards relevant to an organization's operations, ensuring legal and ethical conduct.

A set of rules outlining the social norms, religious rules, and responsibilities of, or proper practices for, an individual or organization.

Behavior that aligns with moral principles and professional standards, fostering trust and integrity within the organization and with stakeholders.

A policy that encourages and protects individuals who report unethical or illegal activities within an organization, ensuring confidentiality and non-retaliation.

Any individual or group affected by or with an interest in an organization's actions, including shareholders, employees, customers, suppliers, and communities.

The open, accurate, and timely disclosure of information by an organization, enabling stakeholders to make informed decisions and hold management accountable.

The act of releasing relevant information about a company's operations, financials, and governance to stakeholders, often required by regulations.

An individual or institution that owns shares in a company, granting them rights such as voting on board members and receiving dividends.

A mandatory yearly gathering of a company's shareholders and directors to vote on issues, approve financial statements, and discuss company performance.

An independent, objective assurance and consulting activity that evaluates and improves the effectiveness of risk management, control, and governance processes.

An independent examination of an organization's financial statements and records by an outside party to provide assurance on their accuracy and compliance.

The independent verification and validation of information, processes, or systems to provide confidence to stakeholders about their reliability and effectiveness.

The ongoing process of tracking and evaluating an organization's performance against goals, using metrics and indicators to inform decision-making and accountability.

A measurable value that demonstrates how effectively a company is achieving key business objectives, used to evaluate success and guide strategy.

A formal document outlining the principles, rules, and procedures by which an organization is directed and controlled, ensuring consistency and accountability.

The process of producing statements that disclose an organization's financial status to management, investors, and regulators, ensuring accuracy and compliance.