The Problem
Low Trust
Trust is arguably the most important and most valuable asset of any organization. Yet according to numerous recent studies, the public’s trust in business is at a 40-year low. And, like it or not, every organization is impacted — by an enormous financial impact, job losses and increased government regulation. | 
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The names and the stories are very familiar: Enron, WorldCom, Bear Stearns, Countrywide and AIG. These are just a few of the most high-profile names, but more are being added all the time. The harm has been done. Trust has been damaged for everyone.
Business has advanced at breakneck speed over the past few decades, tackling new challenges and adapting to changes in the market. But corporate governance has not kept pace, leaving organizations ill-equipped and ineffective in responding to the new environment.
It is this governance gap that is at the root of today’s pervasive deficit of trust.
| Examples · The board does not employ mechanisms — formal or informal — to ensure a tone and culture of organizational integrity, accountability, stewardship and transparency. · The board chair and the CEO are the same individual, trying to juggle often conflicting roles and potentially leaving a lack of true accountability. |
· The board does not periodically perform a formal reassessment of board composition in light of changing market and industry dynamics and risks.
· Key business monitoring disciplines – which include: ethics, social responsibility, risk management and audit/compliance – are not coordinated to create a more integrated, holistic monitoring system that produces independent, reliable and comprehensive information for the board.
The Cause: The Governance Gap