Board Perspective: Risk Oversight

Protiviti Board Perspectives
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Board Perspectives: Risk Oversight
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On February 26, 2021, the Board of Governors of the Federal Reserve System (FRB) in the United States issued expectations for boards of large financial institutions as a standard for its regulators when they assess board effectiveness. The guidance applies to all domestic bank holding companies and savings and loan holding companies with total consolidated assets of $100 billion or more, with certain exceptions, as well as systemically important nonbank financial companies designated by the Financial Stability Oversight Council for FRB supervision. The FRB’s focus on board effectiveness...
Our global survey of C-level executives and directors on macroeconomic, strategic and operational risks highlights their views regarding a disruptive risk landscape over the next decade through 2030.[1] Our global survey captures insights from 1,081 C-level executives and directors across multiple industries, with broad geographic representation. As with our prior surveys, the results captured significant uncertainties by industry, executive position, company size and type, and geographic area. Our survey was conducted online near the end of 2020 to capture perspectives on executives’ minds...
Our global survey of C-level executives and directors about macroeconomic, strategic and operational risks highlights the influence of the COVID-19 pandemic, the economy, digital technology, talent and organisational resiliency on the risk landscape over the near term.[1] Our survey captures insights from 1,081 C-level executives and directors, 39% of whom represent companies based in North America, 19% in Europe, 17% in the Asia-Pacific region, and the remaining 25% from Latin America, the Middle East, India and Africa. As with our prior surveys, the results captured significant...
A diverse, equitable and inclusive board culture contributes to the organisation’s success by positioning directors to advise the CEO and add value in evolving markets. Does your board measure up? Diversity in the boardroom encompasses all dimensions of the human experience, including education, life experience, gender, race, ethnicity, sexual orientation, geography, age and specific areas of knowledge and expertise (such as digital savviness and mergers and acquisitions). Compelling research asserts that a diverse board leads to improved performance and innovation. For example, one study...
While every organization has a risk assessment process, we often hear that the process as it exists now is too static — but change never ceases, as all of us have learned in 2020. Enter adhocracy. The term “adhocracy” has evolved to describe an organizational approach that cuts across normal bureaucratic lines to capture opportunities, solve problems and get results. This issue provides six suggestions for management to employ adhocracy to foster a risk-savvy culture that facilitates the recognition and communication of emerging risks up, down and across the enterprise so that critical and...
With the sudden onset of a worldwide pandemic, companies have had to accelerate their efforts to transform themselves digitally. How can boards and their companies best leverage digital transformation to compete and thrive in a brave new world? At a recent NACD Master Class programme for active directors, one session contrasted the expected churn in the S&P 500 today versus 50 years ago.* Disruption is continuing at a faster pace than any time previously, with the big lesson from the pandemic being that more digitally advanced organisations have proved to be the most resilient. *This...
Environmental, social and governance (ESG) reporting has come into its own as a discipline, with most public companies now issuing sustainability reports. What’s the board’s role in ensuring these reports are responsive to investors’ needs? Inspired by the global rise of reporting beyond financial results, below are 10 questions for boards to ask themselves and their management teams. This discussion applies to companies issuing sustainability reports.  1. Have we set compelling sustainability targets and goals that appeal to the marketplace? Directors should understand how the company’s ESG...
Churchill said he strived “to foretell what is going to happen tomorrow, next week, next month, and next year — and to have the ability afterwards to explain why it didn’t happen.” His acknowledgment of the futility in predicting the future is especially apropos today as markets transition to the eventual “new normal.” The business model is akin to a finely tuned machine requiring the coordination of multiple components to deliver value to customers according to a company’s brand promise. Business models vary by industry. For example: A manufacturer’s model combines a robust supply chain, an...
A year ago, the Business Roundtable (BRT) released its “Purpose of a Corporation”[1] statement expressing a “fundamental commitment” to deliver value to all company stakeholders. Today, as the economy emerges from a terrible pandemic, does this statement matter to directors? The BRT’s statement in which 181 chief executives of prominent American companies committed to deliver value to their respective stakeholders (consisting of customers, employees, suppliers, communities and shareholders) has drawn varying reactions in the marketplace. In our view, the statement is an acknowledgment from...
As global markets continue to address the COVID-19 pandemic, practical digital know-how is becoming more than a desirable attribute that directors aspire to embrace. A compelling study asserts that companies could be falling behind if they lack a digitally savvy board. Boards and business leaders are well aware of the digital revolution taking place across the globe and how digital leaders were able to navigate the choppy COVID-19 seas much more effectively than their less resilient peers. But what’s being done to advance their organisations’ digital capabilities? Specifically, does the board...