Enterprise Governance is “the set of responsibilities and practices exercised by the board and executive management with the goal of providing strategic direction, ensuring that objectives are achieved, ascertaining that risks are managed appropriately and verifying that the organisation’s resources are used responsibly”.

From a publication jointly issued by IFAC’s Professional Accountants in Business and
The Chartered Institute of Management Accountants.

Responsibilities and Practices

Enterprise Governance, an emerging term in the post-Enron era that combines corporate governance or conformance and business governance or performance, encapsulates all the factors that go into governing of an organisation. The two dimensions are indispensable to one another. Commercial Bank has a balanced focus on both dimensions.

The Bank is firmly committed to the highest standards of corporate governance and has complied with the majority of good corporate governance practices recommended by various regulatory bodies such as The Institute of Chartered Accountants of Sri Lanka, Central Bank of Sri Lanka etc. As your representatives, the Board of Directors ensures that the activities of the Bank are at all times conducted with the highest ethical standards and in the best interests of all its stakeholders.

The Board of Directors sets the strategic direction and guides the corporate values. It has set up and enforces clear lines of responsibility and accountability throughout the Bank; as summarized in the diagram below.

The Board on its part had in 2007 an Audit Committee, Human Resource & Remuneration Committee, Credit Committee and Strategic Planning Committee. The composition, mandate and workings of these committees are elaborated on succeeding pages of this section.

Creating value for shareholders through performance with the rest of the staff is the responsibility of the Corporate Management. Each function/profit centre is headed by a member of the Corporate Management. Key Performance Indicators (KPIs) of each function/profit centre as per the corporate plan and the budget are reviewed periodically.

In addition, the Bank has cross functional management committees as also shown in the diagram below. These committees are made up of members from both Corporate Management and Senior Management of the Bank. These committees too meet frequently and review the level of achievement of KPIs.

Empirical evidence shows that well governed companies perform better. The Bank has been able to record an excellent performance as evident from the Compounded Annual Growth Rates of 25% in business volumes and 22% in profits in the past decade. The performance aspect of Enterprise Governance and the management of risks in the process are dealt with in detail in the Management Discussion and Analysis and the Risk Management chapters shown elsewhere in this Annual Report.

The table on Enterpeise Governance of this Report demonstrates the manner and the extent to which the Bank adheres to good Corporate Governance principles.