Which governance mechanism is primarily responsible for risk oversight and internal controls?

• A. Audit committee.
• B. Nominating committee.
• C. Compensation committee.
• D. Public relations committee.

Answer: (A)

Risk oversight and internal controls are primarily handled by the board's audit committee. This committee is responsible for monitoring the integrity of financial reporting, the effectiveness of internal controls, and the independent audit process. By providing an independent check on management, it helps ensure that risks are identified, assessed, and mitigated, and that controls are in place to prevent misstatements, fraud, and regulatory issues. The audit committee often oversees the internal audit function, coordinates with external auditors, and ensures appropriate whistleblower channels and compliance programs are functioning. The other options play different roles in governance: a nominating committee handles board recruitment and succession; a compensation committee sets executive pay and incentives (which can influence risk-taking but isn’t the primary mechanism for risk oversight); and a public relations committee is not a standard, primary governance body focused on risk and controls.