Enterprise Governance

ITGI used the term “Enterprise Governance” to describe a globally applicable prescribed model of organisational governance called the “Enterprise Governance Model” (ITGI, 1999). The Enterprise Governance Model was created in response to three environmental threats listed below as identified by the Information Systems Audit and Control Foundation (ISACF):

1. The ease with which globalisation and worldwide communications can override national boundaries.
2. Uncertainty as to how well financial accounting frameworks, developed to serve the post-industrial society, can be adapted to serve the needs of the information and knowledge-based entities of today.
3. The challenge of understanding how enterprises, including associated entities, are currently run, and how they can be governed effectively in the evolving shift to a knowledge-based society.

ITGI state that “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 enterprise’s resources are used responsibly” (ITGI, 2001).

Furthermore, ITGI clarifies the term “Enterprise Governance” distinguishing it as a subset of Corporate Governance by identifying that the corporate governance regulations and standards establish broad responsibilities and demand, and that board directors should exercise due diligence in their roles of setting strategy and ensuring management implements it (ITGI, 2001).

The concerns raised by ISACF are merely the internal concerns of an enterprise and are isolated to an alignment of an enterprise to a society without considering the governance of an enterprise across societies. Governance is not a prescribed model, and despite this ITGI translates concerns raised by ISACF into a globally applicable prescribed model.

An observation should be made that if governance was a prescribed model, then the ITGI model would apply, but because societies have their own governance, to which enterprises align, applying a single prescribed model to a global enterprise would inhibit this alignment.

The definition provided by ITGI further demonstrates the nature of enterprise governance concept is internal to the enterprise itself; this definition distinctly links the use of a governance perspective in negotiating interest of contributing parties. This distinction is similar to the CGG concept, which is the highest abstract use, and follows fundamental governance nature and for our purpose further demonstrates the generalisation of governance concept.