What are the common board committees in corporate governance and their primary roles?

• A. Audit, Compliance, Compensation, and Environmental committees.
• B. Audit, Marketing, Safety, and Real Estate.
• C. Nominating, Audit, and IT Security committees only.
• D. Audit (financial reporting oversight), Compensation (pay and incentives), Nominating/Governance (board composition and policies), Risk (overseeing enterprise risk management), and sometimes Technology or Sustainability committees.

Answer: (D)

Common board committees exist to give focused, specialized oversight in areas that are critical to a company’s governance and performance. The most widely adopted set includes four core committees and, in many organizations, one or two additional focuses. The Audit committee is responsible for financial reporting oversight, internal controls, and the relationship with the external auditors. The Compensation committee handles executive pay, pay-for-performance structures, and alignment of incentives with shareholder interests. The Nominating or Governance committee oversees board composition, independence, director evaluations, succession planning, and governance policies. The Risk committee (or a similarly named committee) oversees the enterprise-wide risk management framework, risk appetite, and monitoring of major risks across the organization. Some boards also establish Technology or Sustainability committees to oversee technology strategy, cybersecurity and data governance, or environmental and social governance issues. This combination best reflects how boards allocate oversight to critical areas while allowing for additional subjects as needed. The other options either include non-standard committees like Marketing or Real Estate, or omit key oversight areas such as Risk, Compensation, or Governance, making them less comprehensive.