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Corporate Governance & Risk Management Case Analysis
Each student is required to prepare an individual research assignment that evaluates the principles of corporate governance and the risk management processes applied by businesses in times of crisis.
Select two case studies of corporate disasters (post-2000). This could be fraud, product failure, corporate fund mismanagement, etc.
- Case A: a company that demonstrated exemplary governance and risk management practices in response to the disaster.
- Case B: a company that displayed poor or deficient governance and risk management practices in response to the disaster.
Your assignment must:
- describe both disasters (background, nature of the crisis, and business impact).
- analyse the corporate governance and risk management responses of each.
- compare and contrast the two companies’ approaches.
- identify any deficiencies in governance and risk management practices.
- recommend areas and measures for improvement, with reference to best practice and relevant governance/risk frameworks.
Expert Answers on Above Corporate Governance Questions
Case A: Shoprite Data Breach Response
Background about the crisis: The crisis was in relation to Shoprite Holdings whereby the company faced a cyber attack in 2022 which led to the exposure of customer data across several African markets. As a result of this, the company faced the issue of reputational, operational and regulatory risk.
Governance and risk management response: The response by the company is very strict which demonstrates the strong governance mechanism it has in its operations. The company has immediately activated its cyber security incident response plan whereby it notified its customers and forensic security experts.
Business impact: Because of immediate response, the impact was minimal and the company was successful in preserving customer trust and it also improved its cyber security investment afterwards.
Case B: Steinhoff accounting scandal
Background of the case: Steinhoff international collapsed after an accounting scandal was discovered involving inflating of profit and assets in its books of account over several years. As a result of it, there is significant loss faced by the shareholders and it triggered job losses and also affected the overall reputation of investment patterns across the country.
Governance and risk management response: The response by the management was very poor and it clearly reflected weak internal controls, failures on the part of board members, auditor dependence, and ineffective risk committee. The board clearly lacked independence and financial expertise and there was no proper whistleblowing culture.
Business impact: The impact was severe and there were billions wiped out in market value, international lawsuits emerged and the company phased out severe liquidity issues.
Comparison of approaches of both these companies
In terms of transparency, Shoprite communicative immediately whereas Steinhoff hid important details and concealed irregularities for years. The board members of Shoprite immediately whereas the board members of Steinhoff failed in monitoring accountability. In terms of compliance, Shoprite ensure full compliance while Steinhoff failed to comply with accounting standards and governance codes.
Deficiencies in both the cases
In case of Steinhoff, deficiency was clearly evident in terms of lack of board independence, weak internal audit system, poor risk reporting, and no effective whistle blowing. In the case of Shoprite, it needed a strong approach in dealing with cyber security issues.
Recommendations for improvement
In case of Steinhoff, the company needs to strengthen its board’s independence, enhance internal control system and improve transparency and ethical culture. In respect to Shoprite, it needs to perform continuous cyber security investment to avoid such cases of cyber security threats.
| Disclaimer: This answer is a model for study and reference purposes only. Please do not submit it as your own work. |
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