What is the role of governance in strategy and risk management?

• A. Provides day-to-day management and operations.
• B. Provides oversight, sets ethical standards, defines risk appetite, ensures accountability, and aligns strategy with stakeholder interests.
• C. Manages product pricing and marketing campaigns.
• D. Determines tax strategy and accounting policies.

Answer: (B)

Governance sets the framework for how strategy is pursued with appropriate risk consideration. It provides oversight from the board and senior leadership, establishes ethical standards, defines the organization’s risk appetite, ensures accountability, and aligns strategic objectives with stakeholder interests. This “tone at the top” means the strategy is reviewed and approved with a clear understanding of what risks are acceptable, how performance will be monitored, and how outcomes will be reported and challenged. In short, governance ensures that risk management is integrated with strategy and that there is accountability for outcomes, not just execution.

The other activities described are important but belong to management or specialized functions. Day-to-day management and operations carry out plans and run the business. Product pricing and marketing campaigns are operational and strategic marketing decisions. Tax strategy and accounting policies fall under financial management and compliance rather than governance oversight.