What is the primary responsibility of the board of directors in corporate governance?

The primary responsibility of the board of directors in corporate governance is to provide oversight, guidance, and strategic direction. The board acts as a key entity that ensures the company is being run in a way that safeguards the interests of shareholders and other stakeholders. This involves overseeing management decisions, approving significant strategic initiatives, and ensuring that the company adheres to legal and ethical standards.

By focusing on the strategic direction, the board helps set long-term goals and objectives that can drive the company’s vision while balancing the interests of various stakeholders, including employees, customers, and the community. This oversight role is crucial, as it ensures that management is effectively executing the company’s strategies while adhering to the overarching goals set by the board itself.

In contrast, setting company policies and procedures, managing daily operations, and focusing solely on profitability are tasks that fall under different areas of the organization. While these are important aspects of running a successful business, they do not encapsulate the broader, strategic view that the board of directors holds within the corporate governance framework. The board's strategic oversight is essential for ensuring long-term sustainability and success for the organization.