If a board allows management to set its own oversight rules, what governance issue arises?

• A. Loss of board independence.
• B. Enhanced administrative alignment.
• C. Clear accountability structures.
• D. Improved oversight clarity.

Answer: (A)

When the board can only oversee through rules crafted by management, the board loses its ability to judge and challenge impartially. Independence means the board reviews actions, raises concerns, and holds management accountable without being swayed by those who are being overseen. If management sets the oversight framework, they can influence what gets reported, how issues are framed, and how easily concerns are raised, which weakens the board’s objectivity and its checks and balances. The result is a governance weakness in which the board cannot effectively fulfil its fiduciary duty to stakeholders. Therefore, the governance issue is the loss of board independence.