A governing body fails to update bylaws as the organization evolves. What risk arises?

• A. Governance Structure Misalignment
• B. Compliance Risk
• C. Strategic Risk
• D. Reputational Risk

Answer: (A)

Not updating bylaws as the organization evolves creates a mismatch between how the organization actually operates and the formal rules that govern it. Bylaws specify who has authority, how decisions are made, how board and committee structures work, and how responsibilities are allocated. When the organization grows or changes but the bylaws stay the same, the governance framework no longer fits reality, leading to unclear authority, potential conflicts over who can approve actions, delays in decision-making, and gaps in accountability. That gap—where the governance system no longer aligns with the current needs and structure of the organization—is governance structure misalignment.

Compliance or strategic risks can emerge as a result of this misalignment, and reputational concerns can follow, but the core issue here is that the governance framework itself is out of sync with how the organization now operates.