Page 96 - IRMSA Risk Report 2020

6.4
A Y EAR OF E THIC AL AND EFFEC TIVE LEADERSHIP
P ARMI NATESAN

We are all aware of the huge risks and challenges that our country, and thus our organisations, face. Poor leadership got
us into this situation; good leadership is the only way out of it. As directors, we have the opportunity—and privilege—of
providing that leadership within our organisations and thus contributing to the necessary change in our corporate culture.
King IV places this leadership at the centre of everything, and it is embodied in its first, foundational principle: The governing
body should lead Ethically and Effectively.
To bring ethical and effective leadership to life, it’s first necessary to understand what it is. There is no better guide than
King IV’s ICRAFT principles, which provide an excellent guide to the underlying characteristics of such leadership. They are:

INTEGRIT Y
Integrity. At base, this means that directors have to suspend their instincts to act in their own self-interest, and instead
act in the interests of the organisation taking into account its stakeholders. King IV’s recommended practices make it
clear that mere legality is not sufficient: the bar is higher.

C OMPE TENCE
Frequently overlooked but absolutely critical: a director with integrity and the best intentions but who lacks the
necessary skills is arguably as destructive as a dishonest, self-serving one.

RESPONSIBILIT Y
Directors should not only take collective responsibility for discharging their functions, but also act in a responsible
manner. The latter speaks to the need to strike a balance between risk and opportunity in a responsible manner.

A C C OUNTABILIT Y
Directors should always remain accountable for how their responsibilities were executed, even if these are delegated.
manner. The latter speaks to the need to strike a balance between risk and opportunity in a responsible manner.

F AIRNESS
The issue here is that directors should take into account not only the organisation’s interests but also those of all its
stakeholders. The principle of fairness also requires directors to consider the impact of their decisions on the natural
environment, society and future generations. manner. The latter speaks to the need to strike a balance between risk and
opportunity in a responsible manner.

TR ANSP ARENC Y
Directors should make a point of ensuring that they exercise their governance roles and responsibilities in a way that
demonstrates how they arrived at their conclusions.

On an internal note, it’s important to remember that following these principles is the best way to ensure that you do not
find yourself on the wrong side of the law, or suffering a drop in reputation.

Focusing more externally though, the positive impact that you can make on our country as a whole, through the practice
of ethical and effective leadership, is what should keep us all motivated.

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