ICSAN Board Dynamics flashcards
ICSAN Board Dynamics · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Duty of care
- A director's obligation to act with the diligence, skill, and judgement of a reasonably prudent person in comparable circumstances, including adequate preparation and informed decision-making.
- Duty of loyalty
- A director's obligation to act in good faith in the company's best interests, avoid conflicts of interest, and refrain from using position for personal gain.
- Business judgment rule
- A judicial deference doctrine protecting informed, good-faith, disinterested board decisions from hindsight liability, rebuttable by fraud, illegality, or gross negligence.
- Fiduciary duty
- A legal obligation of trust and confidence owed by directors to the company as a whole, requiring loyalty, care, and avoidance of self-dealing.
- Independent director
- A director free from material relationships with the company, its executives, or major shareholders that could impair objective judgement, as determined by the board.
- Board skills matrix
- A structured map of directors' competencies against the company's strategy, risk profile, and succession needs, used to identify gaps and guide recruitment.
- Separation of chair and CEO
- A governance structure where different individuals hold the board chair and chief executive roles, reducing concentration of power and strengthening board oversight.
- Board diversity
- The mix of gender, ethnicity, skills, tenure, and experience on a board, which broadens perspective and improves decision quality when psychological safety exists.
- Audit committee
- A board committee of non-executive directors, majority independent, overseeing financial reporting integrity, external audit, internal control, and internal audit.
- Remuneration committee
- A board committee that sets executive pay, designs incentive plans, and ensures remuneration aligns with long-term strategy and risk appetite.
- Nomination committee
- A board committee that leads board appointments, skills review, succession planning, and governance of the board's composition and renewal.
- Terms of reference
- A written document defining a committee's purpose, composition, quorum, authority, meeting frequency, and reporting obligations to the full board.
- Board pack
- The set of pre-reading materials circulated before a board meeting, ideally decision-focused with issue, options, recommendation, risks, and financial impact.
- Quorum
- The minimum number of directors required to be present for a board meeting to validly transact business, as set in the articles or terms of reference.
- Executive session
- A meeting segment attended only by directors, without management, to encourage candid discussion of sensitive matters such as CEO performance.
- Board minutes
- The formal record of board proceedings, capturing decisions, rationale, dissent, and conflicts of interest, serving as evidence of directors' discharge of duty.
- Board evaluation
- A structured annual review of the board, its committees, the chair, and individual directors, ideally externally facilitated every two to three years.
- Director induction
- A structured onboarding programme for new directors covering strategy, financials, governance, risk, and stakeholder landscape, often paired with a mentor director.
- Board effectiveness
- The board's capacity to oversee strategy, risk, and performance through quality information, constructive challenge, and disciplined follow-through on decisions.
- Director tenure
- The length of time a director has served, relevant to independence and refreshment; long tenure can erode independence and require rotation policies.
- Groupthink
- A group decision failure marked by illusion of unanimity, self-censorship, and pressure on dissenters, countered by structured dissent and pre-mortems.
- Pre-mortem
- A decision technique that imagines a chosen strategy has failed and identifies plausible causes, surfacing risks that optimism and consensus suppress.
- Social loafing
- The tendency of individuals to contribute less effort in larger groups, a risk on oversized boards, countered by clear role expectations and individual appraisal.
- Cognitive bias
- A systematic pattern of deviation from rational judgement, such as anchoring or confirmation bias, that distorts board risk assessment and strategy review.
- Stakeholder salience
- The degree to which a stakeholder commands board attention, determined by the combination of power, legitimacy, and urgency of their claim.
- Stewardship code
- A set of principles encouraging institutional investors to engage with investee companies and exercise voting rights to promote long-term value.
- Related-party transaction
- A transaction between the company and a director, major shareholder, or their associates, requiring independent review and disclosure to prevent value extraction.
- Materiality assessment
- A process identifying which environmental, social, and governance issues are sufficiently significant to affect the company's performance and stakeholder decisions.
- Risk appetite
- The amount and type of risk a board is willing to accept in pursuit of strategic objectives, expressed qualitatively and, where possible, quantitatively.
- Three lines model
- A governance framework where management owns risk, risk and compliance functions oversee it, and internal audit provides independent assurance to the board.
- Whistleblowing
- A confidential channel for employees and others to report misconduct, ideally reporting to the audit committee or an independent function with non-retaliation protection.
- Internal control
- The policies and procedures designed to safeguard assets, ensure reliable reporting, and support compliance, often structured using the COSO framework.