Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Governance Health Check Framework: How to Perform a Corporate Governance Review
November 29, 2024
Image: Freepik/master1305
Every organization should be carrying out a regular governance health check — but what should businesses focus on? Governance expert reveals their trusted health check framework.
Effective governance can never be a ‘set and forget’ endeavor — it needs to be continually monitored, reviewed, and modernized for the business to see its full benefits.
As Marc Hodak, Partner at Farient Advisors, said at Diligent’s user conference, “Good governance is ultimately what is right for the long-term health of the company.”
Diligent, a leader in modern governance, highlights the need for organizations to conduct regular health checks in order to maintain good governance, effectively manage risk, foster diversity and inclusion, and react to the needs of shareholders and the wider society.
In the same way you’d send your vehicle for a regular check-up to help to identify hidden issues so you can proactively address them and drive smoothly, regular governance health checks are also crucial. A deep governance check can uncover potential gaps or weaknesses in the governance structure, allowing businesses to quickly adapt to changing regulatory landscapes, emerging risks, and evolving business needs.
What steps do organizations need to take to complete a corporate governance health check? In the framework below, Diligent’s experts outline how to perform a governance health check to proactively respond to the evolving corporate landscape, empower sustainable growth, and uncover any hidden issues,
The fundamental principles of corporate governance
Good corporate governance considers the rules, practices and processes that guide an organization towards its goals through effective operations and clear decision-making.
Six key principles of corporate governance were issued by the G20 and the Organisation for Economic Co-operation and Development (OECD) in 2023. This guidance assists policymakers in evaluating and improving legal, regulatory, and institutional frameworks while also serving as a guide to help corporations innovate and adapt in a competitive world.
- A clear corporate governance framework. Just like a car requires a solid frame to remain effective over time, good corporate governance requires a strong foundation that supports efficient allocation of resources.
- The rights and equitable treatment of shareholders and key ownership functions. As the owners of a publicly traded corporation, shareholders must be allowed to participate and vote in general meetings, elect and remove members of the board, and approve or participate in fundamental corporate decisions.
- Institutional investors, stock markets, and other intermediaries. Considering those with an interest in the company is a foundational element of corporate governance; brokers, institutional investors, credit rating agencies, analysts, and proxy advisors all require oversight for fair and effective functioning.
- Transparency and disclosure. If a decision affects the material health of a publicly traded company, boards must make investors aware promptly. Corporate governance requires clear, transparent communication with all shareholders and stakeholders.
- The responsibilities of the board. It’s essential the board structure supports effective oversight and accountability so directors can exercise objective and independent judgment, oversee risk, and monitor managerial performance.
- Sustainability and resilience. To ensure a company can withstand change and thrive well into the future, sustainability frameworks, practices, policies, and incentives are integral elements of corporate governance that yield long-term success.
Diligent’s governance health check framework
- Keep up with the news and public opinion. News and public opinion are powerful yet often underutilized sources of information, with many organizations failing to recognize customer and stakeholder perceptions until it’s too late. Keeping abreast of industry news and public opinion helps you better understand public sentiment to ensure your actions don’t have a negative reaction.
- Pinpoint where your business stands. It’s important as part of your governance health to understand your risk and where you stand within your industry. Are you a leader in the field, or is there room for improvement? This data you gather will help you identify gaps and create SWOT analysis reports, which are the basis from which to generate risk and other corporate strategies.
See: UN’s Blueprint for AI Governance and Global Representation?
- Assess sustainability frameworks. Take climate change and the transition to net zero: do you understand the potential risks of moving from fossil-fueled operations to renewable energy sources? What are the risks of not doing so, like non-compliance with evolving regulations or a poor reputation among environmentally-minded future workers? Good corporate governance enables sound management of these risks.
- Review the diversity and inclusivity of your board. Effective governance’s “participatory” nature means boards and organizations must be equitable and diverse. Moreover, these diverse board members and employees need an active voice in corporate decision-making: does your board include and value the views of people with various skills, talents, abilities, experiences, and perspectives?
- Return to your organization’s strategic plan. A strategic plan ensures boards understand where the corporation is going and how it will get there. As part of a governance health check, it’s important to revisit your strategic plan to ensure the decisions you make about the future of the business align with the organization’s overall mission, vision, and values statements.
Once you’ve completed your governance health check, keep up with organizational changes and evolving stakeholder needs through real-time data dashboards for board and leadership collaboration.
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