Unclear roles, responsibilities and processes
A lack of clearly defined roles, responsibilities and processes points to gaps in the organization’s governance system.
Risk type: Cause
Risk driver: Internal
A lack of clearly defined roles, responsibilities, and processes (administrative, management, supervision, operation, checks and balances, etc.) and an undemocratic organizational culture provide the basis for illicit practices and structural conflicts of interest . Gaps in the organization’s governance (e.g. the board ’s accountability to the shareholders or the public; missing, unclear, or double reporting lines; etc.) provide leeway for opportunistic behaviour. At the same time such gaps can result in a situation where individuals are not held accountable – e.g. if it is not clear who needs to evaluate and sanction others.
- A water sector organization has no (corporate) governance statutes.
- Several processes are not clearly defined/no guidance or standard operating procedures are available for key processes.
- Roles and responsibilities of several employees are not defined clearly.
- Reporting lines and mandates of key control positions (e.g. internal auditor , controlling, monitoring) are unclear.
- Responsibilities for supervision are not clearly assigned to specific positions.
- Staff, managers,. and/or board members repeatedly act outside their role or bypass procedures without facing remedies (e.g. board members interfering in operational decisions, managers bypassing procurement rules).
KEY GUIDING DOCUMENTS
Nordmann, D., 2012, Deepening Governance in Water and Sanitation Services, A discussion paper for Water Services Regulatory Board (WASREB)
Incomplete / lack of enforcement of contracts between stakeholders1
The core problem of corporate governance is incomplete/lack of enforcement of contracts between stakeholders (BoD, employees, management, suppliers, consumers, shareholders, etc.). Each stakeholder pursues its own interests which are not necessarily in line with the company/sector interest. Incomplete/not enforced contracts provide leeway for stakeholders for opportunistic behaviour (i.e. corrupt practices) to maximise their individual benefit at the expense of the company/public. This leads to a deadweight loss and undermines sector performance.
- Nordmann, D., 2012, Deepening Governance in Water and Sanitation Services, A discussion paper for Water Services Regulatory Board (WASREB)