In light of the growing scrutiny by regulators and directors growing accountability to shareholders, it is imperative for the board and individual directors to guard against cases of lapsed corporate governance.

In the current climate, boards should be implementing additional controls to protect against greater regulatory scrutiny and criminal sanctions. For example, boards should be satisfied that their company has sufficient controls in place to combat all known and reasonably anticipated corporate risks, including:

• fraud detection and prevention
• insider trading
• continuous disclosure
• conflicts of interest
• insolvent trading
• OH&S risks
• environmental risks
• cartel detection and prevention
• trade practices compliance.

More generally, directors need to be able to demonstrate that they are effectively discharging the primary duties they owe to the company. A priority risk management issue in the discharge of these duties is to ensure that the company has implemented and is maintaining an effective trade practices compliance program within all relevant levels of the corporation's hierarchy.

In an era of greater focus and scrutiny upon individual accountability, board membersshould also make it their priority to ensure that an effective crisis management strategy is in place and that they personally have the benefit of appropriate and effective corporate indemnitiesand D&O insurance cover. Failure to do so could prove costly.

This article is available in full at Mondaq.