The management principles of the board define how a board runs its business. They govern the relationship between a company’s Board of Directors and how it handles corporate matters that can’t be delegated to lower-ranking officials.

Therefore, the board is accountable for a variety of aspects that aren’t properly recorded in the company’s annual report. For instance the board must seek out and hire a CEO, ensure that the company operates in its best interest, and relay concerns to shareholders. The board also has a role in assessing the company’s potential and capacity.

Many boards conduct annual assessments to improve their performance. These may be focused on the board as a whole, the board’s committees, individual directors or the chair.

A common practice is keeping an official record of all meetings. This helps the board understand the implications of its decisions for other parties such as employees and investors. A well-written document can be a valuable source of evidence in legal proceedings.

The board should also be able to assess and determine risk. This includes identifying the firm’s weaknesses and creating plans to mitigate or prevent them. This involves assessing the impact of potential changes on the communities and other stakeholders. The board should also be informed of any major developments as soon as possible. For example the board must be aware whether CEO compensation is out of hand compared to company performance and average worker pay.

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