Lessons learned from high-profile board challenges
Five ways to strengthen board decision-making and benefit from the recent struggles of some public company boards.
Thousands of decisions are made by corporate boards each year. The vast majority are sound, solid and well-researched. But the world is growing increasingly volatile, uncertain and complex, with ever more concerns for boards to stay on top of and ever more decisions for them to make.
Today’s boards face decisions on issues that didn’t even exist a year ago. They need to have a framework that prepares them for dealing with these decisions – the unknown unknowns and emerging issues — and they must be prepared to support their company management through crises by building risk-management capabilities and resiliency.
Fortunately, boards can learn quite a bit from other companies’ very public struggles. Here are five lessons today’s boards can take from companies that have been in the media spotlight recently:
- Minimize the knowledge gap between directors and management by having a board with diverse expertise and backgrounds, fostering continual education and, when necessary, by hiring outside experts or advisors.
- Beware of a CEO cult of personality — or even just a powerful CEO.
- Obtain information from beyond company management.
- Consider and collaboratively oversee risks of all kinds.
- Be prepared to deal with the unknown unknowns.
Read the full article at Directors and Boards.
Glenn Davis is a Risk Advisory Services Principal Emeritus at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S.