Why Do Policies Matter?

Learn why issuing well-crafted and appropriately targeted policies is necessary to define an organization's boundaries, practices and expectations.

This article explores various thought leaders input into Policy Management Best Practices, including a 2-page spread of effective systems, tools and a step-by-step guide to effective policy management.

Policies, done right, articulate and build the desired corporate culture and drive standards for individual and business conduct. Consider that:

  • Policies articulate the governance culture: Policies address more than how to meet legal requirements, they also drive the performance objectives of the organization. Without policies the organization has not made clear what people or business units may or may not do in seeking to meet those objectives. Individuals are left to make decisions and may take the organization where management does not want it to go. Governance is not really taking place.
  • Policies articulate the risk culture: This includes establishment of riskmanagement responsibilities, communication, appetite, tolerance levels, and risk ownership. Every organization takes risk—it is part of business and sometimes helps to get the business where it wants to be. Without clearly written guidance and ownership, however, risk governance will be ineffective and risk decisions will be made by each individual based on his or her personal appetite for risk.
  • Policies articulate a culture of compliance: Policies define what is acceptable and unacceptable. This starts with legal and regulatory requirements: communicating how the organization will stay within legal boundaries given the various jurisdictions in which it operates. Policies also establish the values, ethics, commitments, and social responsibility of the organization, when it comes to matters of discretion.


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