What is corporate governance and why is it important to you? We talk with author and Chicago business leader, Karen Kane, about her new book on Chicago Tonight at 7:00 pm. Read an excerpt from the Prologue ofVoices of Governance:Why Oversight Is Important to All of Us.

Central to the success of modern business practices and financial markets is the idea that corporate governance practices will define how an enterprise is directed and controlled, and make changes needed to ensure that the interests of shareholders are looked after in a responsible, professional, and transparent manner. At the center of the governance system are boards of directors, elected and charged with exercising prudent oversight on behalf of shareholders. Oversight of the enterprise is intended to instill confidence and serve as a check on management.

The financial crisis that emerged in 2008 cast doubt on the foundation of the prevailing governance system – its practices, policies, and core assumptions. Business leaders, shareholders, politicians and a wide array of technical experts grappled first with the crisis itself, and now with the myriad problems that the crisis has left in its wake.

There’s no escaping the scope – and the urgency – of the issues. Calling the Western economic and financial system a “precious machine,” Dominic Barton, Managing Partner of McKinsey & Co., nonetheless argues that the prevailing model of capitalist business faces the risk of survival unless business leaders modernize the system in a way that includes both popular and political support.

In spite of the scandals, corporate disasters and regulatory attempts that unfortunately failed to prevent the crisis, corporations remain the best organization for managing complex and global businesses. But they have to do better.

Voices of Governance describes the breakdown of trust and the critical role that corporate governance plays in getting it back. In these pages, governance leaders talk about the steps they are taking, recognizing the concerns that shareholders have about crony capitalism and bankrupt practices. It begins with board leadership in reinvigorating the organization, the processes and the committee roles as well as the competencies of the board members. Smart boards see the need to transform themselves into strong, highly functioning work groups whose members trust and challenge one another. Directors also need to recognize the role shareholders play: they are the owners of the company and board-shareholder engagement is an important element in keeping them invested. Most importantly, boards need to demonstrate leadership in providing effective oversight in representing the interests of shareholders, and to hold management accountable.

Greater scrutiny and a wider cast of stakeholders have changed the role of the board forever. Directors are expected to bring their relevant business experience and judgment to help companies execute winning strategies. At the same time, directors put their reputations on the line. The best directors engage directly with leadership to challenge and improve management strategies to protect companies against threats of rapid decline and sudden demise. Strong directors can serve as player coaches, helping management to seize the opportunities that can elude management in the daily fray of running the business. The best boards turn governance into a competitive advantage.

There are many voices in the wide-ranging conversation about what broke down in the governance system, what needs to be fixed in order to restore confidence – and how to fix it. Voices of Governance examines the issue of oversight as expressed by governance experts from 2009 to the present. In many individual interviews, as well as commentary on critical presentations and publications, Voices of Governance presents a unique and ultimately optimistic picture of where we are and where we are headed.

Excerpted fromVoices of Governance: Why Oversight Is Important to All of Usby Karen Kane

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