Interview: Mohammed al-Shroogi, President of Gulf business at Investcorp (page 2 of 2)

"It helps in improving growth, lowering the cost of capital and attracting international flows of capital which leads to a healthier financial statement and increased investor confidence," says Al-Shroogi.

Investcorp's board has a range of responsibilities, from ensuring that financial statements accurately disclose the firm's financial condition to monitoring management's implementation of strategy and reviewing risk management systems.

The newly introduced Basel guidelines also encompasses corporate governance issues. "The Basel guidelines set standards both for regulators and financial institutions, with the latest being Basel III," says Al-Shroogi.

"Basel paved the way for a stronger supervision process and improved regulation of the financial sector. When Basel III was introduced, it was seen as leveraging on the impact of Basel II when it introduced new capital requirements and liquidity standards for banks."

Basel succeeded in "raising the bar" for the risk management practices of financial institutions, which are key to the well-structured implementation of good corporate governance practices. However, the road to achieving a more mature risk management model could be a long one and it might not see the light until a few years later, says Al-Shroogi. Regulators might be challenged to maintain the momentum especially as memories of the financial crisis start to fade.

"Within publicly listed companies, the future corporate governance challenge lies in the ability of financial institutions and banks to meet the requirements and deadlines of regulators, and supervisory authorities," says Al-Shroogi.

This article is part of the GCC Board Directors Institute report, for more information please visit their website