Welcome to the Corporate Governance Center

Corporate Governance CenterWelcome to the Corporate Governance Center of Argentina, a tool that will permit you to learn about the most relevant subjects for Boards of Directories, Audit Committees, administration entities and high management in general.

Although this notion is not something new, but it appeared several years ago in countries of Europe, United States and Canada, in our country the business awareness to adopt good corporate governance practices as means to create and sustain the value or organization increases day by day.

The market requires that organizations favor creativity and innovation in their products and services, but rely on a strong, efficient and transparent structure in their operations, that will permit them to compete in an effective manner, take good care of their stockholders' equity and provide an optimal answer to other stakeholders

In this place you will find contributions, articles, resources and elements related to recommended good corporate governance practices, which help to strengthen organizations by adopting practices and promote an efficient, sound and transparent management.

Regulatory framework - The Argentina National Securities Commission

Gobierno CorporativoThe National Securities Commission (CNV) is an autonomous entity with jurisdiction throughout the Republic of Argentina. Its aim is to ensure the transparency of securities markets, to ensure accurate price formation of securities, and to protect investors. The CNV has jurisdiction over companies issuing securities on the public markets, including the secondary market, and has authority as well over intermediaries in these markets. It also has authority over public offerings, on forward contracts, futures and options, and on markets and clearing houses, as well as their intermediaries.

With respect to corporate governance, the CNV in 2001 issued Decree 677 ‘Regime of Transparency in Public Offerings', which considers issues of transparency in the area of public offerings and establishes a legal framework designed to protect the investor in Argentina's capital market.

Broadly, the Decree refers to general principles, obligations of participants in the area of public offerings, external auditors and audit committees, limitations on the purchase or offer to purchase by those participating in a placement of traded securities, marketing operations and other aspects of the public offerings, residual equity schemes, removal of the tender offer, conduct contrary to transparency in the area of public offering and arbitration.
Also in 2007, CNV General Resolution No. 516 set out the minimum requirements of the Code of Corporate Governance. Minimum requirements are grouped into six sections: i) Scope of the Code; ii) The Board of Directors, iii) Independence of Directors; iv) Relationship with Shareholders; v) Relationship with the Community and vi) Committees.

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Define the role of the board as a monitor of the risk management process

Effective monitoring of risk begins with a solid understanding of the extent and nature of the responsibilities of leadership. Key responsibilities include setting the tone and establishing expectations, consideration of risks as a priority, and initiating the communication and activities that constitute an intelligent management of business risks. The ultimate goal of all this is to assist and support the organization in creating a process where risks and their impact are routinely identified, evaluated and managed.

Foster a culture of risk intelligence

In an organization with a risk intelligent culture, people at all levels view risk as an intrinsic part of the way they work. More than risk aversion, people understand the risks of any activity and behave accordingly. This culture of risk intelligence supports open discussion about uncertainty, it encourages employees to express their concerns and it supports a process of raising concerns to the appropriate level of the organization.

Incorporate risk intelligence into corporate strategy

Since one of a board's main responsibilities is to oversee the strategy-setting process, helping management incorporate Risk Intelligence into strategy is an inherent part of a board's overall corporate governance role. Drawing on a solid practical understanding of the enterprise's efforts around value creation and preservation, boards can work with management to collaboratively move from a negative "incident" view of risk to a more positive "portfolio" view that considers risks and rewards in a broader strategic context

Help define the risk appetite

Risk appetite defines the level of enterprise-wide risk that leaders are willing to take (or not take) with respect to specific actions, such as acquisitions, new product development, or market expansion. Where quantification is practical, risk appetite is usually expressed as a monetary figure or as a percentage of revenue, capital, or other financial measure (such as loan losses); however, less quantifiable risk areas, such as reputational risk, may also be considered when setting risk appetite levels.

Execute the risk intelligence governance process

The process of risk intelligent governance should have a strategic design, promote understanding of the direct relationship between value and risk, and finally must allocate available resources to manage effectively and efficiently. The effective implementation of this governance process depends heavily on maintaining a disciplined approach focused on the design of risk management program, its monitoring and accountability.

Evaluate the process

Risk management is an ongoing process. The adoption of continuous improvement mechanisms can greatly benefit management efforts to identify, prioritize and implement improvements, while granting significant visibility on the progress of the organization as it adopts a risk intelligent approach. Such mechanisms also allow comparability with other organizations; they can also help track the progress of your governance program along a Risk Intelligence "maturity model." It is also a good idea to consider evaluating the process with periodic independent evaluations.


Subject of the month (Editorial)

Intelligent corporate governance at risk

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By Alfredo A. Pagano

In many organizations, risk management and value creation are seen as opposites or even as mutually exclusive when in fact they should be treated as two sides of the same coin. After all, every decision, activity and initiative to create or protect the value of the organization involves to some degree an element of risk-taking.

Therefore, proper risk management requires a risk intelligent approach, that is, an approach that seeks not to discourage risk-taking or entrepreneurship, but to implement appropriate processes for managing such risks within the various business initiatives of the company.


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Main links

Deloitte's Global Corporate Governance Center
National Securities Commission
Central Bank of Argentina
Institute for Corporate Governance
International Finance Corporation
International Chamber of Commerce
Organization for Economic Cooperation and Development
International Corporate Governance Network
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