What Is Corporate Governance and What Role Does It Play in Digitalization
In a time where technological advances enable fast development, companies must be quick and dynamic to rapidly respond to market demands.
The digital world is evolving so quickly that it has become a necessity for companies to assume a proactive role in the management of their digital transformation. Globalization is changing the business ecosystem, adding a new layer of regulatory complexity.
The nature of such a dynamic business environment complicates corporate governance processes and presents a challenge to boards and upper management that want to stay informed about new risks and opportunities that appear every day.
- What is corporate governance?
- What is important in corporate governance?
- What are the objectives of corporate governance?
- How to influence the digitalization of corporate governance
- Digitalization helps improve good corporate governance
- Advantages of digitalizing corporate governance
- Practical applications for digitalization in corporate governance
- Leadership improves efficient corporative governance
What is Corporate Governance?
Corporate governance is the systems and rules that establish the policies and procedures of companies to govern their commercial activities. It generally refers to the structure and management practices of a company, including the duties and responsibilities of its executives.
Why is corporate governance important?
Corporate governance is designed to guarantee the long-term viability of a company. Today, corporate governance has become an essential part of how companies are managed, since investors want to have visibility into management’s performance.
What are the objectives of corporate governance strategies?
The main goals of a corporate governance strategy are to increase profitability, transparency, and efficiency and to promote good conduct while discouraging bad conduct, as well as identifying risks and mitigating them, to protect the interests of shareholders through the capabilities and composition of the board.
Thereby, focusing decisions made by management towards their responsibilities, rights, and obligations. This includes the board of directors, management, shareholders and other stakeholders.
How digitalization influences corporate governance
Currently, corporate governance strategies require technology, knowledge and management processes to promote transparency in organizations that enable them to react to challenges efficiently.
Digital tools play a major role for administrative units since they enable faster, fluid and secure communication from anywhere in real time.
The importance of data security
Data security is one of the main pillars of any corporate governance strategy. Data leaks can cause a loss of confidence in a company's ability to keep information secure and protected.
Although digitalization has introduced many new efficiencies in the business world, it has also created new security risks.
Therefore, modern companies must have secure communications channels and tools to share data securely.
Boards of directors cannot make effective decisions without efficient and secure communication channels.
Therefore, any tool used must be ultra-secure and must be protected against external cyber attacks and unauthorized access.
Digitalization helps improve good corporate governance
Digitalization is rapidly changing how companies do business. Board members must have a clear understanding of the consequences of digitalization of their company, industry and society.
To ensure they have adequate capabilities, companies must participate in digital transformation initiatives preemptively.
The board of directors has evolved from a formal consulting body to one with a more active role in the company. It has evolved to include more frequent, and faster interactions, meaning that those processes must keep up.
Boards are therefore adopting digital tools to give members fast and accurate information.
Advantages of digitalizing corporate governance
Digitalization has many advantages like the ability to store large quantities of information, and rapid access to it from anywhere in the world, as well as the ability to share information with anyone in real time.
The digital era has revolutionized administrative tasks that would take days or weeks which can now be finished in minutes.
Digitalization enables leaders to work more efficiently, with more efficient processes and relevant data, enabling faster decision making and taking advantage of new opportunities with the help of adequate technology. Thereby, achieving better and more efficient corporate governance processes.
EDICOMSignADoc is a document approval solution that uses electronic signatures. It makes slow and labor-intensive approval processes faster and more efficient. This solution generates evidence of approval processes using the correct trust services and security measures giving approvals probative value.
It optimizes management processes, speeds up communications between parties and offers transparency and certainty to documents exchanged with clients, suppliers, employees, and shareholders.
Digitalization can increase the security level of internal management processes.
Our world continues to digitalize. Companies and users are now constantly sharing critical and sensitive information in services in the cloud. This scenario has created new threats, but has also brought new awareness surrounding the importance of protecting privacy, integrity, and accuracy of stored information.
EDICOMLta is EDICOM’s long term archiving service with the highest security standards complying with ISO and European, Mexican and Colombian standards. This service guarantees secure and confidential access to confidential information stored, giving them probative value according to third party requirements thanks to the evidence documents that EDICOM can provide as a trust services provider.
Practical applications for digitalization in corporate governance
Corporate governance is made up of best practices to increase transparency between the company and all its stakeholders.
Digital tools speed up the implementation of corporate governance measures. Evidence and logs help clarify agreements reached with people and organizations linked to the company, reducing client, supplier, and employee response times.
These applications affect the management of received invoices. The implementation of specific services to automate the integration of these documents combined with invoice approval solutions will accelerate your management and improve relations with suppliers and creditors. The ability to store invoices with associated purchase orders and their approvals gives more security and transparency to the entire accounts receivable process.
Digitalized leadership improves the efficiency of corporate governance processes
Digitalized leadership and management. The new path to follow.
Simplify decision making and business processes. It also helps managers to easily review performance efficiency and to take on calculated risks through a feedback analysis and other information.
This decision making process and digital management has reduced paperwork and improved company efficiency.
Although it may be very difficult and time consuming to make a business decision, it does not have to be with the help of digital tools.
There are now many digital tools available to improve the efficiency of corporate governance.