Financial Governance, Ethics and Regulatory Context

Introduction

Financial governance is the system through which an organisation is directed, controlled and held accountable for the use of money and the creation of value. It includes the responsibilities of the board, senior management, owners, auditors, regulators and other stakeholders. In banking, finance and insurance, governance has unusual importance because institutions manage other people’s money, rely heavily on public confidence, and can transmit their failures to the wider economy.

A profitable organisation may still be poorly governed. Profit can result from excessive risk-taking, weak controls, misleading disclosure or the exploitation of customers. Strategic financial management therefore requires more than selecting investments and financing arrangements. It requires decisions that are financially sound, ethically defensible, legally compliant and consistent with the organisation’s long-term obligations.

This chapter examines agency, stewardship and stakeholder theories and applies them to board oversight, fiduciary duties, internal control, disclosure, compliance, fraud prevention and conflicts of interest. It also considers the role of technology, whistleblowing and risk culture in contemporary financial governance.

Learning Objectives

By the end of this chapter, students should be able to:

1. Explain the meaning and importance of financial governance.
2. Compare agency, stewardship and stakeholder theories.
3. Analyse the roles of boards, committees, executives, auditors and regulators.
4. Explain fiduciary duties and the purpose of internal control systems.
5. Distinguish ethical misconduct, fraud, error and conflicts of interest.
6. Evaluate disclosure and compliance responsibilities in financial institutions.
7. Recommend governance responses to practical ethical and control problems.
8. Assess how data analytics and artificial intelligence can support or weaken governance.

1. The Nature and Purpose of Financial Governance

Governance differs from day-to-day management. Management makes and implements operational decisions; governance establishes direction, approves risk appetite, monitors performance and holds decision-makers accountable. Financial governance is concerned particularly with capital, liquidity, risk, reporting, investment, lending, insurance underwriting, remuneration and financial integrity.

The central governance problem is that those who provide capital or are affected by an institution may not control its daily decisions. Shareholders, depositors, policyholders, pension members and taxpayers depend on directors and executives to act responsibly. Governance mechanisms reduce the risk that power will be used for personal advantage or short-term results at the expense of the organisation and its stakeholders.

A sound governance system normally seeks to achieve five outcomes:

• responsible and effective strategic direction;
• reliable financial and non-financial information;
• prudent management of risk and capital;
• compliance with law, regulation and internal policy; and
• accountability for decisions and consequences.

Governance is not equivalent to avoiding all risk. Financial institutions must take risk to earn returns and serve customers. The objective is informed, authorised and monitored risk-taking within an agreed risk appetite.

2. Theoretical Foundations

2.1 Agency theory

Agency theory examines the relationship between a principal, who delegates authority, and an agent, who exercises that authority. In a company, shareholders are commonly treated as principals and managers as agents. In a bank, the relationship is more complex: depositors, borrowers, shareholders, employees, regulators and governments may all be affected by managerial decisions.

Agency problems arise because:

• managers may have information unavailable to owners;
• managers and owners may have different objectives;
• managers may receive benefits from size, prestige or remuneration rather than sustainable value; and
• owners may be unable to observe effort or risk-taking directly.

Agency costs include monitoring costs, bonding costs and residual losses. Boards, independent directors, audits, performance contracts, disclosure and regulatory supervision are mechanisms intended to reduce these costs. However, poorly designed incentives can worsen agency problems. For example, a bonus based only on annual loan growth may encourage weak underwriting and concealment of credit problems.

Agency theory is particularly useful when analysing executive remuneration, related-party transactions, audit independence and the need for segregation of duties. Its limitation is that it can present individuals as primarily self-interested and may encourage excessive monitoring or short-term performance measurement.

2.2 Stewardship theory

Stewardship theory proposes that managers can act as responsible stewards whose motives include professional commitment, organisational purpose and long-term service. Under this view, excessive controls may undermine trust, slow decisions and discourage initiative.

Stewardship does not mean that controls are unnecessary. Rather, it suggests that governance should combine accountability with an environment in which competent professionals can exercise judgement. A chief risk officer who challenges an attractive but dangerous transaction may be acting as a steward even when the challenge reduces immediate revenue.

Stewardship is supported by:

• a clear organisational mission;
• professional standards;
• long-term remuneration;
• leadership by example;
• psychological safety for raising concerns; and
• development of expertise and responsibility.

The limitation is that trust can be misplaced. A strong personal reputation or long tenure does not eliminate the possibility of bias, misconduct or error. Stewardship must therefore operate alongside independent oversight.

2.3 Stakeholder theory

Stakeholder theory holds that the organisation has responsibilities to groups affected by its decisions, not only to shareholders. Relevant stakeholders may include customers, depositors, policyholders, employees, suppliers, communities, governments and future generations.

The theory is especially significant in financial services. A bank’s failure can harm depositors and borrowers; an insurer’s weak reserves can harm policyholders; and misleading investment advice can damage households that lack specialist knowledge. Stakeholder governance therefore considers fairness, access, privacy, financial inclusion, consumer protection and systemic stability.

Stakeholder theory raises a difficult practical question: how should competing interests be balanced? A decision that increases shareholder returns may increase fees for customers or reduce employee security. The board should make the trade-off explicit, assess legal duties, consider material impacts and document its reasoning.

2.4 Integrating the theories

The theories are complementary rather than mutually exclusive. Agency theory highlights controls and accountability; stewardship theory highlights trust and purpose; stakeholder theory highlights the wider consequences of decisions.

A mature board uses all three perspectives. It designs controls for possible misconduct, cultivates responsible stewardship and evaluates consequences for stakeholders.

3. Board Oversight and Fiduciary Responsibility

The board is responsible for the organisation’s direction and oversight, while executives are responsible for management within delegated authority. The exact legal duties vary by jurisdiction, but common fiduciary principles include acting in good faith, exercising care and diligence, avoiding improper conflicts, protecting organisational assets and acting for a proper purpose.

3.1 Core board responsibilities

The board should:

• approve strategy and financial objectives;
• establish risk appetite and monitor risk capacity;
• appoint, evaluate and, where necessary, replace senior executives;
• oversee financial reporting and disclosure;
• ensure appropriate internal controls and audit arrangements;
• supervise capital, liquidity and solvency planning;
• review remuneration and incentives;
• monitor conduct, culture and customer outcomes; and
• ensure compliance with applicable law and regulation.

A board should not attempt to manage every transaction. Its role is to ensure that management has appropriate authority, competence, information and controls. Effective oversight depends on asking challenging questions, not merely receiving presentations.

3.2 Board composition and committees

Independence helps directors evaluate management objectively. Relevant skills may include accounting, risk, technology, law, insurance, banking, economics and consumer protection. Diversity of experience can improve challenge and reduce groupthink.

Common committees include:

• Audit committee: financial reporting, external audit, internal audit and control deficiencies.
• Risk committee: risk appetite, exposures, stress testing and risk management systems.
• Remuneration committee: pay structures, incentives and alignment with long-term outcomes.
• Nomination or governance committee: board composition, succession and evaluation.
• Conduct or customer committee: treatment of customers, complaints and market conduct.

Committees assist the board but do not remove the board’s ultimate responsibility. A committee cannot be used as a shield against inadequate oversight.

3.3 Fiduciary duties in practice

A director considering a transaction with a company controlled by a family member should disclose the relationship, leave the decision where required, and ensure that the transaction is independently assessed. A director who approves a high-risk acquisition without reading the due diligence materials may breach the duty of care even if the acquisition later succeeds. Conversely, a director is not normally expected to guarantee that every business decision succeeds; the issue is whether the decision process was informed, honest and within authority.

The business judgment principle in some legal systems protects directors who make honest, informed and rational decisions without conflicts. It does not protect fraud, bad faith, undisclosed self-dealing or wilful disregard of obvious risks.

4. Internal Control and Risk Governance

Internal control is the set of policies, processes, behaviours and systems designed to provide reasonable—not absolute—assurance regarding effective operations, reliable reporting, asset protection and compliance.

A widely used control framework groups controls into five connected components:

1. Control environment: integrity, ethical values, accountability and competence.
2. Risk assessment: identification and analysis of threats to objectives.
3. Control activities: approvals, reconciliations, segregation of duties and access restrictions.
4. Information and communication: timely, accurate information to appropriate users.
5. Monitoring: ongoing and independent evaluation of control performance.

4.1 Preventive, detective and corrective controls

Preventive controls attempt to stop an event before it occurs. Examples include credit approval limits, dual authorisation of payments and restricted system access. Detective controls identify events after or while they occur, such as bank reconciliations, exception reports and internal audit reviews. Corrective controls respond to identified weaknesses through recovery, disciplinary action, system changes or policy revision.

No control is perfect. Controls may fail through collusion, management override, poor design, excessive complexity or outdated data. Strong governance therefore combines several controls and evaluates whether they operate in practice.

4.2 Segregation of duties

A basic principle is that no one person should control all stages of a sensitive transaction. Authorisation, custody, recording and reconciliation should be separated where practical. For example, an employee who creates a supplier in the payment system should not independently approve and reconcile payments to that supplier.

In a small institution, full segregation may be impractical. Compensating controls can include owner review, independent reconciliations, transaction alerts and periodic external examination. The control design should reflect the risk, not merely the size of the organisation.

4.3 Risk appetite and escalation

Risk appetite is the amount and type of risk an organisation is willing to accept in pursuit of its objectives. It should be translated into measurable limits, such as concentration limits, underwriting standards, liquidity thresholds or operational loss tolerances. Breaches should trigger escalation, investigation and, where necessary, corrective action.

Risk appetite is different from risk capacity. Capacity is the maximum risk the institution can absorb without threatening viability or breaching legal requirements. Appetite must remain below capacity, leaving a safety margin for uncertainty and stress.

5. Financial Ethics and Professional Conduct

Financial ethics concerns the principles governing fair, honest and responsible conduct in financial decisions. Legal compliance is a minimum standard; ethical conduct may require more than what can be enforced in court.

Important ethical principles include:

• Integrity: being honest and avoiding deception.
• Objectivity: resisting bias and improper influence.
• Competence and care: maintaining knowledge and exercising professional judgement.
• Confidentiality: protecting information while meeting legal reporting duties.
• Fairness: treating customers and counterparties without unjust discrimination.
• Responsibility: accepting accountability for decisions and consequences.

Ethical risk frequently arises through incentives and culture rather than explicit instructions to break rules. Sales targets, promotion systems and informal norms may pressure employees to sell unsuitable products, delay recognition of losses or ignore customer complaints.

A useful ethical decision process is:

1. Identify the facts, affected parties and applicable duties.
2. Separate legal requirements from broader ethical considerations.
3. Identify conflicts, biases and missing information.
4. Consider alternative actions and their foreseeable consequences.
5. Seek independent advice or escalate where appropriate.
6. Document the reasoning and review the outcome.

The “front-page test”—whether one would be comfortable seeing the decision publicly reported—is a useful prompt, but it is not a substitute for legal and professional analysis.

6. Disclosure, Transparency and Compliance

Disclosure allows investors, customers, regulators and other stakeholders to make informed decisions. Financial institutions commonly disclose financial statements, risk exposures, capital information, governance arrangements, related-party transactions, remuneration and material uncertainties, subject to applicable law.

Good disclosure should be accurate, complete in all material respects, timely, understandable and consistent with internal records. Misleading disclosure can arise not only from false statements but also from omission, selective presentation, unexplained changes in measures or excessive optimism.

Management should establish a disclosure committee or equivalent process involving finance, risk, legal, compliance and investor relations. The process should identify who owns each disclosure, what evidence supports it, who reviews it and how changes are approved.

Compliance as a governance function

Compliance involves identifying legal and regulatory obligations, translating them into policies and controls, monitoring adherence, reporting breaches and supporting remediation. It is not merely a legal department’s task. Business managers own the risks created by their activities; compliance provides challenge, advice and monitoring; internal audit provides independent assurance.

Typical regulated areas include:

• anti-money laundering and counter-terrorist financing;
• customer identification and due diligence;
• sanctions screening;
• consumer protection and fair treatment;
• market abuse and insider trading;
• data protection and cybersecurity;
• prudential capital, liquidity and solvency;
• conduct of insurance and investment business; and
• record retention and regulatory reporting.

Regulatory requirements differ across jurisdictions. Students and practitioners must consult current legislation, supervisory rules and professional standards rather than relying on general summaries.

7. Fraud, Misconduct and Conflicts of Interest

Fraud is intentional deception for personal or organisational gain. It differs from error, which is unintentional, although repeated “errors” in the same direction may indicate misconduct. The fraud triangle identifies three common conditions: pressure or incentive, opportunity, and rationalisation. A strong control environment reduces opportunity and makes rationalisation more difficult, while realistic targets and support may reduce harmful pressure.

Examples of financial fraud include:

• creating fictitious customers or transactions;
• manipulating loan classifications or impairment estimates;
• unauthorised trading;
• misappropriating customer funds;
• falsifying expense claims;
• bribery and kickbacks; and
• concealing losses through misleading reports.

Fraud risk assessment should consider incentives, access rights, unusual transactions, management override and third-party relationships. Data analytics can identify duplicate payments, unusual timing, round-dollar transactions, dormant accounts with sudden activity and transactions just below approval thresholds. Analytics generates leads; it does not prove misconduct.

Conflicts of interest

A conflict exists when personal, financial or other interests could improperly influence professional judgement, or reasonably appear to do so. Conflicts may be actual, potential or perceived. Examples include lending to a director’s business, accepting valuable gifts from a supplier, allocating investment opportunities to relatives, or an analyst owning securities about which they publish research.

A sound conflict process requires disclosure, recording, assessment, mitigation and monitoring. Responses may include recusal, independent review, information barriers, disposal of an interest or declining the transaction. Disclosure alone is not always sufficient, especially where the conflicted person retains decision power.

8. Whistleblowing, Assurance and Accountability

Employees often observe misconduct before external parties do. A credible whistleblowing system should provide confidential or anonymous reporting where lawful, protection from retaliation, independent investigation, documented outcomes and communication that concerns are taken seriously.

Internal audit evaluates governance, risk management and controls independently from the activities it audits. External audit provides an opinion on financial statements under applicable auditing standards, but it is not a guarantee that all fraud or control failures will be discovered. The board must understand the scope and limitations of each assurance provider.

Accountability requires more than identifying an individual after failure. The organisation should examine incentives, supervision, system design, reporting lines and whether warning signals were ignored. A “just culture” distinguishes deliberate misconduct from good-faith error while ensuring that negligence and concealment are addressed.

9. Technology and Artificial Intelligence

Digital finance creates new governance opportunities and risks. Automated controls can screen transactions continuously, enforce approval limits and produce audit trails. Data analytics can support fraud detection and regulatory monitoring. However, poor data quality, algorithmic bias, cyberattack, model error and excessive reliance on automation can create new vulnerabilities.

When AI is used for credit, insurance pricing, fraud detection or customer service, governance should address:

• the purpose and permitted use of the model;
• data provenance, quality and representativeness;
• explainability and contestability of decisions;
• discrimination and disparate impact;
• human oversight and escalation;
• model validation and performance monitoring;
• cybersecurity and privacy; and
• accountability when the system causes harm.

Responsibility cannot be transferred to an algorithm or vendor. Senior management and the board remain accountable for the institution’s use of technology.

10. Illustrative Case: Meridian Bank’s Incentive Failure

Background

Meridian Bank introduced an annual bonus based mainly on the number and value of new small-business loans. Branch managers were praised for rapid growth. The bank had formal credit policies, but the same managers could influence customer onboarding, recommend exceptions and report performance.

Problem

After two years, reported loan growth was strong. An internal review later found incomplete income verification, repeated overrides of credit limits and loans made to connected businesses. Some managers delayed recognising arrears because their bonuses depended on portfolio performance. A number of customers received products that were unsuitable for their cash-flow capacity.

Analysis

The case demonstrates an agency problem: managers had incentives to maximise reported growth rather than sustainable credit quality. It also reflects weak stewardship because professional judgement was displaced by target pressure. Stakeholder harms included customer over-indebtedness, depositors’ exposure to losses and reputational damage.

Controls were formally present but poorly designed. Segregation of duties was inadequate, exception monitoring was weak and the board received growth information without sufficiently demanding portfolio-quality information. The problem was therefore not simply individual dishonesty; it was a governance and culture failure.

Approach and solution

The board should:

1. suspend or recalculate bonuses using risk-adjusted and deferred measures;
2. review affected loans and recognise impairments appropriately;
3. investigate connected-party relationships and possible misconduct;
4. separate sales, credit approval and portfolio monitoring responsibilities;
5. introduce independent quality reviews and early-warning indicators;
6. strengthen customer suitability and affordability assessments;
7. provide protected reporting channels; and
8. require regular board reporting on overrides, arrears, complaints and remediation.

A balanced incentive approach might include loan quality, repayment performance, customer outcomes, compliance and long-term portfolio value rather than volume alone. No single metric eliminates risk, so the board should monitor a combination of indicators.

Outcome

In this illustrative case, Meridian’s revised controls reduced rapid loan growth but improved repayment quality and customer confidence. Some managers lost bonuses and two were disciplined for deliberate concealment. The board also revised its risk appetite and required post-implementation reviews of major incentive changes.

Learning points

The case shows that governance failures often emerge from interactions among strategy, incentives, information and culture. A policy is ineffective if employees are rewarded for bypassing it. Boards must ask not only whether controls exist, but whether they influence behaviour and produce reliable information.

11. Challenges and Limitations of Governance Systems

Governance systems face several persistent difficulties. First, regulation can become a checklist exercise in which institutions demonstrate documentation without improving conduct. Second, independent directors may lack the time, data or technical expertise to challenge management. Third, excessive committees and reporting can create information overload. Fourth, global institutions may face inconsistent legal requirements across jurisdictions.

Other limitations include:

• groupthink and confirmation bias;
• dependence on management-generated information;
• unclear accountability across the three lines of defence;
• conflicts between commercial speed and control procedures;
• cyber and third-party risks;
• difficulty measuring culture and customer harm; and
• incentives that reward short-term performance.

Effective governance is therefore adaptive. Boards should review whether controls remain appropriate as products, technology, markets and regulations change. Independent challenge, scenario analysis, post-event learning and direct contact with customers and operational staff can improve oversight.

12. Best-Practice Governance Checklist

An institution seeking stronger financial governance should be able to answer “yes” to the following questions:

• Are strategy, risk appetite and financial objectives consistent?
• Are directors competent, independent where necessary and willing to challenge?
• Are fiduciary duties and conflicts clearly understood and documented?
• Does remuneration reward sustainable, compliant outcomes?
• Are financial reports supported by reliable evidence and review?
• Are duties segregated and access rights regularly reviewed?
• Are control failures escalated without retaliation?
• Are customers and other stakeholders considered in major decisions?
• Can the organisation identify, investigate and remediate fraud?
• Are technology and AI governed throughout their life cycle?
• Does the board receive concise, timely and decision-useful information?
• Are lessons from incidents incorporated into policy, training and systems?

Chapter Summary

Financial governance directs and controls the use of financial resources while balancing performance, risk, accountability and stakeholder interests. Agency theory explains the need for monitoring and control when decision-makers may pursue different interests from those who delegate authority. Stewardship theory emphasises trust, professionalism and long-term responsibility. Stakeholder theory extends governance analysis beyond shareholders to customers, employees, communities, regulators and the financial system.

Boards oversee strategy, risk appetite, reporting, remuneration, controls and culture, while fiduciary duties require good faith, care, proper purpose and management of conflicts. Internal control consists of the control environment, risk assessment, control activities, information and communication, and monitoring. Ethical conduct requires more than minimum legal compliance and depends significantly on incentives and organisational culture.

Reliable disclosure, compliance systems, whistleblowing, internal audit and external assurance support accountability. Fraud prevention requires attention to pressure, opportunity and rationalisation, together with segregation of duties and analytical monitoring. Technology and AI can strengthen governance but create risks involving bias, privacy, cybersecurity, explainability and accountability. The central lesson is that governance is a behavioural and strategic system, not merely a collection of documents.

Key Terms

Agency theory: Theory explaining conflicts between those who delegate authority and those who exercise it.

Board oversight: Direction, supervision and challenge exercised by the governing board.

Compliance: Processes for identifying and meeting legal, regulatory and internal obligations.

Conflict of interest: A situation in which personal interests may improperly influence professional judgement.

Control environment: The ethical values, leadership, structure and accountability forming the foundation of internal control.

Disclosure: Communication of material financial and non-financial information to authorised users.

Fiduciary duty: A duty to act loyally, carefully and in the proper interests of the organisation or beneficiary.

Financial governance: Systems for directing, controlling and holding accountable the use of financial resources.

Fraud: Intentional deception for personal or organisational gain.

Internal audit: Independent assurance and advisory activity evaluating governance, risk and controls.

Internal control: Processes providing reasonable assurance over operations, reporting, asset protection and compliance.

Risk appetite: The type and amount of risk an organisation is willing to accept.

Risk capacity: The maximum risk an organisation can absorb without threatening viability or breaching requirements.

Stewardship theory: Theory viewing managers as potentially responsible custodians of organisational resources.

Stakeholder theory: Theory recognising responsibilities to groups affected by organisational decisions.

Three lines of defence: A model distinguishing operational ownership, risk/compliance oversight and independent assurance.

Whistleblowing: Reporting suspected wrongdoing through protected internal or external channels.

Review Questions

Short Answer Questions

1. What is financial governance, and why is it particularly important in banking and insurance?
2. Identify two differences between agency theory and stewardship theory.
3. What are the five components of a widely used internal control framework?
4. Distinguish preventive, detective and corrective controls.
5. Why is disclosure alone not always an adequate response to a conflict of interest?

Long Answer Questions

1. Compare agency, stewardship and stakeholder theories and explain how a board can integrate all three.
2. Discuss the relationship between fiduciary duties, board committees and executive accountability.
3. Explain how incentive systems can create fraud and conduct risks in financial institutions.
4. Evaluate the role and limitations of internal audit, external audit and compliance functions.
5. Discuss the governance challenges created by artificial intelligence in credit, insurance and fraud decisions.

Analytical / Application Questions

1. A bank rewards loan officers solely for quarterly loan volume. Analyse the agency, stakeholder and control risks, and recommend a redesigned governance response.
2. A director owns shares in a supplier seeking a major contract. Explain the steps required to manage the conflict and protect the integrity of the decision.
3. An analytics system identifies many transactions just below approval thresholds. Design an investigation and escalation process, distinguishing an analytical alert from proof of fraud.

Multiple Choice Questions with Answers

Question 1

Which theory most directly explains the need to monitor managers because their interests may differ from those of owners?

A. Agency theory

B. Stewardship theory

C. Stakeholder theory

D. Institutional theory

Correct Answer: A. Agency theory

Question 2

Which board committee typically focuses on financial reporting, external audit and internal audit?

A. Remuneration committee

B. Audit committee

C. Nomination committee

D. Conduct committee

Correct Answer: B. Audit committee

Question 3

Which of the following is a preventive control?

A. A post-transaction bank reconciliation

B. An internal audit investigation

C. Dual authorisation of payments

D. A report analysing last year’s losses

Correct Answer: C. Dual authorisation of payments

Question 4

Risk appetite is best defined as:

A. The maximum loss ever experienced by an organisation

B. The amount and type of risk an organisation is willing to accept

C. The total value of an organisation’s assets

D. The risk that cannot be measured

Correct Answer: B. The amount and type of risk an organisation is willing to accept

Question 5

Which situation is most clearly a conflict of interest?

A. An employee attends mandatory compliance training

B. A director evaluates a contract with a company owned by the director’s spouse

C. An auditor reviews a documented reconciliation

D. A manager reports a control weakness

Correct Answer: B. A director evaluates a contract with a company owned by the director’s spouse

Question 6

What is the main purpose of segregation of duties?

A. To ensure one person controls an entire transaction

B. To reduce the opportunity for error or fraud by dividing responsibilities

C. To eliminate the need for supervision

D. To replace external regulation

Correct Answer: B. To reduce the opportunity for error or fraud by dividing responsibilities

Question 7

Which condition is part of the fraud triangle?

A. Pressure or incentive

B. Guaranteed profitability

C. Complete transparency

D. Independent ownership

Correct Answer: A. Pressure or incentive

Question 8

Why should AI-generated fraud alerts not be treated automatically as proof of misconduct?

A. Algorithms cannot process financial data

B. An alert identifies a pattern requiring investigation, not established intent

C. Fraud can never be investigated using technology

D. Regulators prohibit all automated monitoring

Correct Answer: B. An alert identifies a pattern requiring investigation, not established intent

Question 9

Which statement best reflects stakeholder theory?

A. Only shareholders’ immediate returns matter

B. Managers should never be monitored

C. Governance should consider groups affected by organisational decisions

D. Regulation is unnecessary when profits are high

Correct Answer: C. Governance should consider groups affected by organisational decisions

Question 10

A control that identifies unusual transactions after they occur is primarily a:

A. Preventive control

B. Detective control

C. Strategic objective

D. Fiduciary duty

Correct Answer: B. Detective control