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Part five Risk and organizations > 25 Corporate governance model - Pg. 273

273 25 Corporate governance model Corporate governance Corporate governance covers a very wide range of topics, and risk management is an integral part of the successful corporate governance of every organization. Most countries in the world place corporate governance requirements on organizations. These requirements are particularly strong in relation to companies quoted on stock exchanges, organizations that are registered charities and government depart- ments, agencies and authorities. For instance, companies listed on the London Stock Exchange have to be guided by the Combined Code on Corporate Governance published by the Financial Reporting Council. The purpose of corporate governance is to facilitate accountability and respons- ibility for efficient and effective performance and ethical behaviour. It should protect executives and employees in undertaking the work they are required to do. Finally, it should ensure stakeholder confidence in the ability of the organization to identify and achieve outcomes that its stakeholders value. There are two main approaches to the enforcement of corporate governance standards. Some countries treat corporate governance requirements as `comply or explain'. In other words, the organization should comply with the requirements or explain why it was not appropriate, necessary or feasible to comply. If appropriate, an organization could explain that an alternative approach was taken to achieve the same result. In these countries, the requirements may be regarded as one means of achieving good practice, but equally effective alternative arrangements are also acceptable. Other countries require full compliance with detailed requirements, although limited alternatives for achieving compliance are sometimes included within these requirements. In these countries detailed compliance is expected and exceptions would not be acceptable. Corporate governance requirements should be viewed as obligations placed on the board of an organization. These requirements are placed on board members by legislation and by various codes of practice. Often, these corporate govern- ance requirements are presented as detailed codes of practice. To start the process of enhancing corporate governance standards, an organization may develop