Ethical and responsible decision making

Principle 6: Ethical and responsible decision making

Each board should ensure and actively promote ethical behaviour and decision making within their organisation. Good corporate governance ultimately requires people of integrity to ensure that the reputation of an organisation is managed, protected and enhanced.

A culture of integrity and ethical behaviour is characterised by:

• an effective code of conduct
• quality decision-making processes
• people of the highest integrity and ethical standards
• an intent to put the organisation ahead of individual gains.

Principle 6.1:

That the board establish a code of conduct to guide directors, the chief executive officer and other senior management as to:

• the practices necessary to maintain confidence in the organisation's integrity
• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Commentary and guidance

The code of conduct should set out ethical and behavioural expectations for both directors and
employees. It is critical that the board and senior management demonstrate, through their words
and actions, absolute commitment to the code and stakeholders in its execution. Adherence to the code should be periodically evaluated and action taken, where necessary.

Principle 6.2:

That the board ensure key decisions and actions are based on a thorough review of all available information and are assessed against the organisation's risk management framework and that these are documented.

Commentary and guidance

When organisations embrace opportunities to expand or promote the sport they should assess the opportunities against the risk framework and key strategic objectives of the organisation. There should be evidence of an evaluation of the benefits and risks prior to any key decision being taken by management or the board.

Principle 6.3:

That the board ensure a business case is developed for each major project or significant event/activity prior to the organisation committing resources and that the worst-case scenario has been evaluated and can be mitigated/managed by the organisation.

Commentary and guidance

The development of a business case allows sporting organisations to embrace opportunities to expand or promote the sport through a major event/activity by assessing the ability of the organisation to sustain a worst-case scenario loss.Given that most sporting organisations have very limited available resources, the assessment of risk and opportunities is critical to the long-term viability of the organisation. To not develop business cases for major projects and events potentially leads to poor decision making and lack of awareness of the various scenarios that may play out, hence all major events/activities should be fully costed and assessed for variations from budgeted figures prior to the organisation committing scarce resources.