Which of the following is NOT a component of a governance system?

A governance system is structured around components that guide and direct the organization’s approach to achieving its objectives while managing risks and resources effectively.

The first three components—people, skills, competencies; policies, principles, and frameworks; and culture, ethics, and behavior—are fundamental to governance. These elements ensure that an organization not only complies with regulations and standards but also fosters a conducive environment for good decision-making and accountability.

People, skills, and competencies are crucial because they define the human resources necessary to implement governance effectively. Policies and principles provide the operational framework within which organizations function, guiding behavior and decision-making. Culture, ethics, and behavior shape how the organization operates on a daily basis, influencing everything from strategic initiatives to employee interaction and stakeholder engagement.

In contrast, financial forecasting, while important for operational planning and resource allocation, is not inherently a component of governance itself. It focuses on predicting future financial outcomes rather than establishing the principles and behaviors that govern organizational actions, making it distinct from the core components of a governance system.