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The principles of corporate governance reviewed in this chapter provide the foundations to project governance and thereby project risk governance. Even though they originate from a diverse set of sources they have commonalities. Across principles, emphasis is placed on the responsibilities of the board of directors and the rights of shareholders. Broad guidance is provided to the board to meet its responsibilities: set the strategic direction and monitor organisational performance, engage with the shareholders/stakeholder to determine organisational goals and, importantly, implement an enterprisewide risk management system. Project governance supports corporate governance by overseeing the activities of projects in enhancing organisational value. Project risk governance in turn satisfies the responsibility of the board to manage risks and that of project governance to add value to the organisation.

Example of Corporate and Project Governance at ABC University

The approach to corporate governance of ABC University is influenced by the voluntary 'best practice for governance' guidelines developed by government for the country's universities. Its aims are to strengthen university governance through its governing bodies, reporting and accountability, oversight and risk assessment.

The equivalent of the board of directors is the University Council. It is chaired by the chancellor who oversees the development and discussion of council agendas. Besides the responsibility to the council, the chancellor provides the visibility of the university to the wider community. He/she represents ABC University, together with other university officials, in political, cultural and economic life. Co-operation with the vice-chancellor, the chief executive officer of the university, provides the chancellor with insights into the operations of the university. However, a clear distinction is made between the strategic nature of governance at the council level and executive management of the university's operations.

The responsibilities of the council are to appoint the vice-chancellor and monitor his/her performance. It approves the strategic direction of the university and monitors the university's performance through reports submitted to it. Being a university, the performance of academic activities is of particular interest to the council. Recognition is given to the role of risk management across the university, including risks associated with commercial undertakings.

Council members are expected to act at all times in an honest, ethical and transparent manner. They can expect to be given accurate and timely information by the university's executive management and use this to make decisions that are in the best interests of the university. Their performance and effectiveness is assessed annually through a survey or through a review conducted by an outsider. Members are inducted by being informed about the council's role and the key features of the university.

Supporting the council in its governance function are the Office of Academic Governance and the Office of Governance Services. The former manages ABC University course approval processes and supports the Academic Board and its subcommittees, the Curriculum, Teaching and Learning Committee, the Research and Higher Degrees Committee and the Academic Services Committee. The Office of Governance Services oversees the university's governance framework and comprises council and committee support, university-wide records management, student complaints, and communication with the Student Guild.

A member of the council is the Director, Risk and Audit Services. This section operates in an independent manner in carrying out risk assessments and audits.

Its role is to increase the awareness of risk management, control and compliance throughout the university by conducting consultative reviews and providing client-focused advice, balanced reporting and follow-up processes. The aim of risk management is not to eliminate risk but rather to manage the risks involved in all university activities, with the overall goal of maximising opportunities and minimising adversity. Effective risk management is achieved by adopting a strategic focus, seeking to balance the cost of managing risk and the anticipated benefits of the outcome.

Project activities at ABC University are managed through the Project Management Office (PMO). It provides centralised project support, mainly for IT project delivery. Its activities are identified as:

• Providing a standardised and industry accepted method for delivering projects using the PRINCE2™ project management framework.

• Defining of project roles and responsibilities.

• Administrating and maintaining the IT project portfolio.

• Reporting to senior management on project portfolio status.

• Inducting new project managers.

• Mentoring project staff.

• Maintaining a central file storage to capture experiences in project work.

ABC University's governance activities are included in its annual report. It discloses to the public its corporate governance standards and risk management approaches and achievements. For example, it is pointed out that the risk management framework complies with ISO Standard 31000 Risk Management and that during the past year a number of risk management projects were completed. They include examining the controls of current IT systems and testing the contingency plan for one of the campuses.

Governance is an important responsibility for the university and has a high profile through the deliberations of the University Council and its subcommittees. Much attention is given to setting strategic directions, developing vision and value statements and policies and procedures. There are regular audits performed, both by the internal Risk and Audit Services, and by the external Government Audit Office. Project governance, however, has not yet been acknowledged in the university's governance responsibilities. Instead, the focus is on project management operating through the Project Management Office. Standards are maintained by following the principles of PRINCE2™.

While the positive role of risk management is acknowledged by Risk and Audit Services, there is little activity in taking on a risk-seeking characteristic. The risk appetite of ABC University is low because it is a government-controlled entity. Similarly, risk tolerance levels are restricted as public funds are at stake. However, as public funding is reduced ABC University will have to adopt some entrepreneurial activities to make up for any shortfall. It is at this stage that PRG will become an important responsibility.

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