A governance system should clearly distinguish between governance and which of the following?

A governance system is designed to ensure that an organization meets its strategic objectives and operates within its risk appetite, focusing on creating value while minimizing risks. A critical aspect of a governance system is to clearly distinguish governance from management.

Governance refers to the framework of processes, rules, and practices that guide decision-making in the organization. It involves setting direction, establishing policies, and ensuring that the organization's operations align with its strategic goals. On the other hand, management is primarily concerned with implementing those policies and strategies. Management focuses on the day-to-day operations, resource allocation, and ensuring that the organization's staff and processes are effectively achieving the established goals.

The distinction is essential because governance sets the framework within which management operates. Without this clear differentiation, there can be overlaps or misunderstandings which could lead to ineffective decision-making or accountability issues. Therefore, differentiating governance from management helps to maintain clear roles and responsibilities within the organization, ensuring that governance and management functions support each other effectively while remaining distinct.