Risks Confronting Boards: All Risk, No Action
In our previous edition of Concerns, we identified a recurring issue: top risks, even though they were acknowledged, generally received minimal or no action (both at the board and management levels). With that foundational information, we investigated this further.
This year we started with the assumption this was happening – and asked directors which risks, specifically, garner the most board discussions with the least management action. We did so in an open-ended format, allowing for a range of responses. While the results greatly varied for all three board types, the top concerns recognized but receiving little action were senior management succession planning, cybersecurity and financial risks.
Some of the varying written-in responses from the directors include:
Our Chief Risk Officer, Peter Bible, shed some light on senior management succession planning and how to combat this trending issue of talking about yet not acting on the risk. “Succession planning is a difficult topic for management. The board can help by discussing in the context of crisis management: so the CEO is gone; how do we function? Perhaps by raising the hypothetical (yet inevitable), we can get management to act.”
At a recent NACD (National Association of Corporate Directors) roundtable, comprised of primarily private board directors, labor issues were raised as a risk (reflecting what was called out in our survey). Their discussion highlighted a robust concern: from a skill deficit to lack of training for the changing needs of the workforce.
Be sure to check back in the coming weeks for a Q&A podcast with Peter Bible as he provides his insight and advice on how boards might move management to action on some of these top concerns.