Risk is everywhere – and changing rapidly. New technologies, demographic shifts and globalization are happening as we see a reinvention of industry, consumption and even the very future of work. While this unprecedented transformation is revealing new opportunities, there are also many new risks for companies to navigate. Building a foundation of trust is an important first step in turning digital disruption into long-term value.
The board’s role here is critical. Boards today are challenged to help steer companies through a shifting risk terrain, overseeing a dynamic risk management approach that embraces disruption and enhances resiliency and trust. While prevention must always remain a priority, advanced crisis preparation is now imperative to building agility and readiness in the face of fast-evolving risks.
As a board member, it is critical to stay engaged, informed and relevant to effectively oversee risks, strategy and culture in this Transformative Age. From increasing stakeholder activism, rising geopolitical tensions and new social contracts to cybersecurity and digital privacy, directors must look beyond the boardroom to enhance their understanding of the company’s operating environment and external risks. They must also strengthen their pulse on the company’s culture, including commitments to innovation, intergrity and inclusive diversity.
As boards see their agendas continue to expand, they also must remain attentive to financial reporting and regulatory matters. This requires near-constant rebalancing of attention.
Leading boards are challenging themselves to look beyond tomorrow by asking the right questions today.
- How are we bringing the outside in to effectively enhance our visibility concerning external business risks and challenge internal bias and inertia?
- As we explore new strategies, transcations and innovations, what steps are we taking to better understand the risk dimensions that they introduce?
- Are we confident that our scenario planning and tabletop exercises are sufficiently building enterprise resiliency related to material risks?
- In this era of radical transparency, are their opportunities to enhance our communications with key stakeholders?
By staying abreast of emerging issues and governance trends and proactively securing insights and education, boards are optimizing their effectiveness and empowering themselves to improve risk oversight and maximize strategic opportunities. They are, in fact, transforming their approach to risk oversight, board effectiveness and director engagement in this age of transformation.