Which of the following processes does the board manage to ensure adequate governance?

The board of directors' fundamental responsibility in governance is to ensure its own effectiveness. This includes managing the process for selecting and nominating board members who possess the necessary knowledge, skills, experience, and independence. This process, typically overseen by a nominating or governance committee of the board, is a core governance function. A properly constituted board is the foundation for providing effective oversight of strategy, risk, and control, which are essential components of an adequate governance structure.

A. The audit committee, a subcommittee of the board, typically manages the direct oversight and performance measurement of the internal audit activity, not the full board.
C. Management is responsible for developing and executing the strategic plan. The board's role is to oversee, challenge, and ultimately approve the plan, not to manage all three phases.
D. Management is responsible for developing and implementing risk mitigation strategies. The board's role is to provide oversight of the overall risk management framework and process.

1. OECD. (2015). G20/OECD Principles of Corporate Governance. OECD Publishing.

Reference: Chapter II, Section E, "The board should fulfil certain key functions," states that a key board function is "Ensuring a formal and transparent board nomination and election process." This directly supports that the board manages its own selection process as a core governance duty.

2. The Institute of Internal Auditors Research Foundation (IIARF). (2010). Corporate Governance and the Board—What Works Best.

Reference: Page 21 states, "The nominating/corporate governance committee is responsible for identifying individuals qualified to become board members consistent with criteria approved by the board." This confirms that the process of selecting board members is managed by the board itself through one of its committees.

3. The Institute of Internal Auditors (IIA). (2017). International Standards for the Professional Practice of Internal Auditing (Standards).

Reference: Standard 2110: Governance. The commentary notes that the board is responsible for "overseeing risk management and control" and "making strategic and operational decisions." This highlights the board's oversight role, which is distinct from the management's role of developing and executing plans (as incorrectly stated in option C) or developing risk mitigation strategies (as in option D). The board's ability to perform this oversight is predicated on its own competence, making its composition (option B) a primary managed process.