Governance, ethics and risk management key to healthy firms: Minister

Good governance, ethics and risk management enable organisations to function and grow, said Mr Edwin Tong, Minister for Culture, Community and Youth and Second Minister for Law.

He was addressing a virtual audience at yesterday's launch of a new social enterprise founded under the RHT Rajan Menon Foundation, a registered charity.

The RHT Grace Institute aims to uphold governance, risk management, anti-money laundering, compliance and ethics as five core business principles.

Mr Tong said: "These five principles form the backbone of any healthy organisation.

"We have seen how the lack of these principles can lead to the demise of seemingly large and strong organisations."

He cited the Enron scandal in 2001, when the company went bankrupt owing to accounting fraud and corruption, and the Lehman Brothers collapse in 2008 that caused global markets to plummet.

"So the importance of these principles cannot be underestimated or overemphasised," he said. "They help to protect investments, jobs and lives of people. They also enable the organisation to grow."

He added that surveys have found that investors will pay more for the shares of well-managed companies.

"Consumers are also more willing to buy their products and services if they identify with their ideals, values and practices. Conversely, companies can lose customers quickly if they display poor ethical behaviours."

He noted that Singapore is one of the easiest places to do business in the world, but it does not mean that it is lax, adding that firms set up shop here because of trust in various systems.

"To maintain that trust, we do require companies incorporated in Singapore to adhere to strict regulatory compliance on areas such as governance, risk management (and) anti-money laundering.

"The obligations increase accountability and transparency and assure the investors, shareholders and other companies of the prudential rigour of the company before they decide to invest in or work together."

The new institute has developed an app so users can connect and share experiences and best practices.

Temasek Foundation Cares chairman Richard Magnus said at the launch: "Organisations in the 21st century are exposed to dynamic changes, including geopolitical and protective policies. Corporations rise and fall based on their values, business culture and associated actions.

"Changing corporate values, breeding a principled environment, and adapting customised training based on organisational need are paramount for the success of these organisations."

Sue-Ann Tan

A version of this article appeared in the print edition of The Straits Times on November 06, 2020, with the headline 'Governance, ethics and risk management key to healthy firms: Minister'. Print Edition | Subscribe