Two recent pieces share the thoughts of board members and advisors.
McKinsey had a podcast and published an edited transcript in The role of the board in preparing for extraordinary risk. It makes the point that “Risks that threaten a company’s existence require unique interventions from the board”.
A senior McKinsey advisor, Celia Huber, reported:
We run an annual global board survey of approximately 1,500 corporate directors, and we found that directors are not pleased with their performance on risk management. In fact, only 7 percent of the respondents believe that over the past year their boards were “most effective”—the highest rating—at risk management, and only 40 percent say their organizations are prepared for the next large crisis.
A McKinsey consultant answered the question of where board should focus their attention.
It’s the high-consequence, low-likelihood events, such as the pandemic, that can cause long-term economic impact, significant reputational damage, and leadership changes. But you also want to consider the certainty of that impact. This is not about looking for “black swans” but identifying events that would have significant ramifications for the core of your organization and value proposition. If you provide cybersecurity, for example, a cyberattack will be a core…
