What are Sound Practices?
Sound practices are a set of standards and controls that mitigate numerous risk factors in the corporate enterprise. Sound practices must address corporate governance, operational and market risk factors, regulatory compliance, corporate citizenship, and stakeholder communications within a set of defined expense ratios.
Corporate Governance
James Wolfensohn, former President of the World Bank stated, "Corporate governance is about promoting corporate fairness, transparency and accountability." Sound practices are a necessary prerequisite for effective and ethical corporate governance. Businesses must accept its precepts and clients and investors must demand compliance, ethical trading principles, honest and timely disclosure, operational integrity and a full commitment to its implementation and adherence. Effective corporate governance practices maintains the faith of investors and provide clear measures of transparency, accountability and performance measurement of business managers and owners.
Financial Health
The implementation of a sound practices program is a powerful value creation tool. A sound practices program provides investors and creditors an enhanced level of confidence that operational risk factors are minimized and other classes of risk are being monitored and controlled. Corporate and transactional transparency and shareholder disclosure is assured. Investor confidence and a more thorough understanding of a corporations strategy and risk characteristics will be the result of a sound practices program.
Investor Communications
The sound practices program advocates the delivery of reports, analysis tools and management compliance statements to investors and corporate stakeholders through accessible media channels. All communications should support a stated level of transparency for investor disclosure. Investors should expect timely disclosure of corporate risk factors and other events pertinent to corporate performance, profitability and potential risk events and factors.
Brand Building, Regulatory Compliance and Best Practices
Sound practices require that regulatory compliance programs be embraced as a brand building exercise. Corporations that approach compliance by implementing best practice solutions will mitigate reputational and regulatory risk, attract high end clientele, and command premium product margins.
