What Should Board Members Be Doing Now?
In times like these, the tension in most corporate board rooms is thick, but many board members may not be taking the necessary actions to ensure that they or their fellow members are not unduly exposed. At the core of the issue is requiring management to establish a solid Enterprise Risk Management (“ERM”) program that surfaces the appropriate issues and holds management accountable for addressing risks in a proactive manner.
The following was noted by Joann Lublin and Cari Tuna in Monday’s Wall Street Journal.
“Now, more boards may take a bigger role in risk management. During a Sept. 9 roundtable held by the National Association of Corporate Directors, 24 chairmen of audit committees agreed “the whole board needed to be engaged” in monitoring risk, an association official says.”
Other areas that board members need to address include the following.
- Pick directors with temperament, skills and experience to spot warning signs
- Engage in regular scenario planning
- Choose independent law firm as future crisis adviser
- Create an effective risk-management committee
- Appoint a nonexecutive chairman
- Develop and practice an emergency communications system
- Prepare for special committee to explore crisis’s cause and remedies
Board members are realizing that in today’s turburlent climate, a lack of action toward addressing a company’s risks can be more deadly than originally thought. Just ask the board members at Lehman, they can surely tell you.
What other areas should board members address to strengthen a company’s corporate governance and enterprise risk management practices? Please share your thoughts by commenting below.
