Michele Wucker, Strategy + Business, March 11, 2020
Your company’s board of directors is charged with reviewing all kinds of risks to the corporation. But how well prepared are its members to do so? How ready are directors to evaluate, communicate, and act on risks — and thus to better ensure that their companies are doing a good job? A great deal rides on the answers to these questions.
Understanding the risk attitudes of directors as individuals and as a whole can make all the difference if a risk materializes into a full-blown crisis. Davia Temin, founder of the New York–based crisis management firm Temin and Company, said it’s essential to understand and improve a board’s risk reaction dynamics during times of calm. “It’s better to fix the fissures on a board ahead of time because every fissure will explode in a crisis,” she said.
She recommends boards do an annual risk survey to determine how attuned different directors are to various risks. Crisis scenario games can shed light on differences among board members in their responses to stress and risks, and help board chairs to identify ahead of time which directors they might lean on most when — not if — a crisis hits. In fact, PwC’s 2019 survey found that the percentage of directors participating in crisis management tabletop exercises doubled since last year, from 28 percent to 56 percent. […read more]