Governance can be defined as “the exercise of political authority and the

use of institutional resources to manage problems and the affairs of the

society”.

According to the World Bank “Governance is the manner in which power

is exercised in the management of a country’s economic and social
resources for development.”

According to Rhodes “Governance refers to self-organizing, inter-

organizational networks characterized by interdependence, resource-
exchange, rules of the game, and significant autonomy from the state”.

To Hyden “Governance is the stewardship of the formal and informal

political rules of the game. Governance refers to those measures that
involve setting the rules for the exercise of power and settling conflict over
such rules”.

TYPES OF GOVERNANCE

1. Participatory or Democratic Governance

Participatory or democratic governance ensures the participation of

citizens in the process of policy making and its implementation.
Participation can be through election, referendum, Landsgemeinde or local
self governance, protest, etc. 

Democratic governance is not just a set of rules and institutions, it refers to

the processes in which democratic institutions are functioning according 
democratic processes.

The fundamental of this type of governance is to ensure the service

delivery to all sectors of the societies. And it is only possible by securing
the people’s participation in the process of decision making processes in
all  the democratic institutions.  

2. Global Governance

This is one of the most relevant types of governance. The term ‘Global

Governance’ was first used by Rosenau. He argues that “Global governance
is conceived to include systems of rule at all levels of the human activity-
from the family to the international organization- in which the pursuit of
goals through the exercise of the control has transnational repercussions”.
The idea of global governance has its roots in the fact that today the states
exist with non-state actors. Today alongside states we have the presence of
international institutions like the United Nations (UN), International
Monetary Fund (IMF), the World Bank, World Trade Organization (WTO).
We also have powerful non-state actors like multinational corporations
(MNC), global civil society, non-governmental organizations (NGO). 

This shows that the idea of governance in the present time and looking at
from the global perspective it’s a very complex and contested notion.
Similarly, this also has implications for the domestic policymaking that is
governance in the domestic realism also is having contestant contours. 

3. Good Governance

Good governance is the ideal concept or normative concept. This concept

is born when ethics, values are included in the discussion of governance.
Now the question is when will we call any governance as good
governance? 

When governance is characterized by Participation, Rule of Law,

Transparency, Responsiveness, Consensus Oriented, Equity and
Inclusiveness, Effectiveness and Efficiency, Accountability then we called it
good governance. 

Must Read- Good Governance: Definitions, Characteristics, And

Importance

4. Corporate Governance

Today corporate governance is a buzzword of the corporate boardroom

across the world. Corporate Governance is a set of rules or code of conduct
for the corporate sector or corporate governance. By corporate governance
the government can regulate the corporate companies. Every company has
to follow those rules or code of conduct to start their business in a
particular state or region.

Must Read- Corporate Governance: Meaning, Principles, And Importance

5. Environmental Governance

It provides explanations of ways that can be implemented in the

development of international environmental regulations, development of
environmental sciences and information, and sustainable development and
implementation policies in line with national policy. 

It controls the management of environment and natural resources for

proper utilization of the resources and securing sustainable development. 

According to the UNEP (United Nations Environment Programme),

“Environmental governance is a key driver for the achievement of
sustainable development.” It can be achieved by fulfilling three initiatives- 

 Coherent international decision-making processes;

  Adequate capacities for agreed objectives and national environmental
priorities through adequate legal and institutional measures;
 Integration of environmental sustainability in development at regional,
sub-regional and national levels.
6. E-Governance

Application of Information and Communication Technologies in the

process of governance gave birth of the idea of E-Governance. E-
Governance or Electronic governance is a modern initiative to make the
governing process more transparent and accountable. Its goal is to use
technology for the greater good of society. 

This system secures service delivery to the citizens at minimal cost, effort
and time using internet services. It also ensures a strong relationship
between state and civil society and The functioning of public authorities at
all levels of planning. This is also called a service oriented concept. 

e-governance services are available at Four levels.

 G2C (Government to Citizens)

 G2B (Government to Business)
 G2G (Government to  Government) 
 G2E (Government to Employee)

DIMENSION OF GOVERNANCE

1. Public Sector Management 

This dimension has been emphasized on the capacity building of the public
sectors for sound economy and quality service delivery to the citizens.
Within this dimension, there are basically three key areas that have been
focused:

 Public expenditure management, Civil service reform, and parastatal

reform for improving public investment programming and the
budget process,
 Strengthening the personnel management and
 The effectiveness and efficiency of public services through the
process of decentralization.
2. Accountability 

This is one of the most important dimensions of governance. The World

Bank very much emphasizes accountability. It has been described as ‘the
heart of governance’. Generally, accountability means ‘holding public
officials responsible for their action’. Political leaders have been responsible
for the citizen for the implementation of sound socio-economic policies.

It has also been referred to as the balance between public policy and its
implementation and proper allocation of public resources for social and
economic development. 

The public accountability depended on the three indicators:

 The interrelationship between public services and people,

 Relationship between political leaders and supervisors of public
services or private services, 
 Aims and Objectives of supervisors of public services. 
Accountability has been considered in terms of satisfactory service delivery
to the citizens and how much effect of the people’s participation in the
policymaking process of governance.

3. The Legal framework for Development 

The bank has discussed the legal framework for development on the basis
of rule of law for stable economic growth. The rule of law has been
considered as the legal dimension of governance by the state.

The bank has highlighted two ways of understanding the rule of law:

 Instrumental and
 Substantive.
Former concentrates with the ‘formal elements necessary for a system of
law to exist’ and later refers to the ‘content of the law and concepts such as
justice (for example, due process), fairness (the principles of equality), and
liberty (civil and political rights)’.

4. Transparency and Information 

The last but not the least dimensions of governance is transparency and

informationAccording to the bank, ‘a competitive market economy requires
that economic actors have access to relevant, timely, and reliable
information’.

To the bank, transparency and information have been beneficial in terms of

three areas:

 Economic efficiency;
 Transparency as a means of preventing corruption; and
 The importance of information in the analysis, articulation, and
acceptance of policy choices.

Conclusion
From the above discussion, on meaning, definitions, dimensions,
and types of governance, it can be said that governance is the process in
which policies are made and implemented. For policymaking and its proper
implementation, governance needs reformation of public sector
management, accountability, the legal framework for development,
transparency, and information. It can be discussed in a descriptive or
empirical as well as normative or prescriptive way. 

When we study it in an empirical way then we find the concept of

participatory governance, global governance, corporate governance, e-
governance, environmental governance. In normative ways of study, the
concept of good governance arises.
As the generic meaning of risk management is "Either we should do that thing or
not? If we did what would be the consequences? If not done what are we missing
out?"

Here, i am not just going to explain this things but i will give some insights about
how the entire process of risk management work. What steps to take, how to do the
proper and utmost risk management of anything. Let's begin-

What is Risk Management?

Everyone knows what risk is; we use the word everyday and take risks regularly,
whether we realize it or not. In every decision we make, when assessing the pros and
cons, we are also doing a risk assessment.

The challenge is to make it a more conscious process as we discussed above will help
to bring utmost of that scenario and where the business is concerned.

So what is risk management in simple terms?

Risk management is the process of identifying and assessing risks and creating a plan
to minimize or control those risks and their potential impact on an organization. A
risk is a potential for loss or damage. Risks can come from a variety of places such as
legal liability, natural disasters, accidents, management errors, or cybersecurity
threats.

A risk exists where there is an opportunity for a profit or a loss. In terms of losses, we
commonly refer to the risks as exposures to loss, or simply exposures. A fire is an
exposure. Defective products or defamation are liability exposures. The loss of
business that results from a damaged building or tarnished reputation is also an
exposure.

In broad terms, risks may be broken down into two categories:

 Pure Risk - Risks where the possible outcomes are either a loss or no loss. It
includes things like fire loss, a building being burglarized, having an employee
involved in a motor vehicle accident, etc.
 Speculative Risk - Risks where the possible outcomes are either a loss, profit, or
status quo. It includes things like stock market investments and business
decisions such as new product lines, new locations, etc.
Why Manage Risk?

There are many reasons to manage risk. Some of them include:

 Saving resources: people, income, property, assets, time

 Protecting public image
 Protecting people from harm
 Preventing/reducing legal liability
 Protecting the environment
 Risk Analysis Process - There is a very long process for risk analysis. But cut short
to these 4 steps to get a clear overview. Also these steps can be utilized in
personal life as well as in professional life.
1. Identify existing risks

Risk identification mainly involves brainstorming. A business gathers its employees

together so that they can review all the various sources of risk. Whereas individually
we explore our situation. The next step is to arrange all the identified risks in order of
priority. Because it is not possible to mitigate all existing risks, prioritization ensures
that those risks that can affect a business or individually significantly are dealt with
more urgently.

2. Assess the risks

In many cases, problem resolution involves identifying the problem and then finding
an appropriate solution. However, prior to figuring out how best to handle risks, we
should locate the cause of the risks by asking the question, “What caused such a risk
and how could it influence the business?”

3. Develop an appropriate response

Once a business entity or individual is set on assessing likely remedies to mitigate
identified risks and prevent their recurrence, it needs to ask the following questions:
What measures can be taken to prevent the identified risk from recurring? In
addition, what is the best thing to do if it does recur?

4. Develop preventive mechanisms for identified risks

Here, the ideas that were found to be useful in mitigating risks are developed into a
number of tasks and then into contingency plans that can be deployed in the future.
If risks occur, the plans can be put to action.

Types of Risk

 Interest Rate Risk: It is the risk of adverse effect of interest rate movements on a
firm’s profits or balance sheet.
 Credit Risk: It is the risk which may arise due to default of the counter-party.
 Liquidity Risk: It is the risk which arises if the given asset or fund is not traded at
right time in the market.
 Internal Business Risk: it is due the inefficiency of management in the business.
 External Business Risk: This type of risk arises due to external environment in the
business.
 Financial Risks: This risk originates due to improper composition of the
operations.
 Market Risk: This is the risk which occurs due to market conditions which results
in reduction in returns expected on investment. It is also referred to as price risk.
 Basis Risk: This risk is due the price of the asset and the hedged instrument are
not perfectly correlated.
 Volatility risk: Risk of suffering losses from changes in implied volatility of the
market.
 Personnel Risk: This risk is the one which may occur due to inefficient or
incapable personnel in the business.
 Country or Sovereign Risk: When a country is in difficulty in terms of making its
financial commitments for that country as well as for other countries then this
type of risk is Country or Sovereign Risk.
 Technology Risk: Type of risk which arises due to failure in technology.
 Operational Risk: This risk is due to any type of operational failure like,
inadequate monitoring, systems failure, management failure, human error.
Operational Risk includes Model risk, people risk, legal and compliance risk.
 Foreign Exchange Risk: It is due the changes in the foreign exchange rate,
currency values etc. which affects the firm

Components of Internal Controls

A company's internal controls system should include the following
components:
 Control environment: A control environment establishes for
all employees the importance of integrity and a commitment to
revealing and rooting out improprieties, including fraud. A
board of directors and management create this environment
and lead by example. Management must put into place the
internal systems and personnel to facilitate the goals of
internal controls.
 Risk Assessment: A company must regularly assess and
identify the potential for, or existence of, risk or loss. Based on
the findings of such assessments, added focus and levels of
control might be implemented to ensure the containment of
risk or to watch for risk in related areas.
 Monitor: A company must monitor its system of internal
controls for ongoing viability. By doing so, it can ensure,
whether through system updates, adding employees, or
necessary employee training, the continued ability of internal
controls to function as needed.
 Information/Communication: Solid information and
consistent communication are important on two fronts. First,
clarity of purpose and roles can set the stage for successful
internal controls. Second, facilitating the understanding of and
commitment to steps to take can help employees do their job
most effectively.
 Control Activities: These pertain to the processes, policies,
and other courses of action that maintain the integrity of
internal controls and regulatory compliance. They involve
preventative and detective activities.