Board Perspectives: Risk Oversight

Protiviti Board Perspectives
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Issue
104
06/2018
The results of a recent survey noted that the top two global risks are concerns over disruptive change to the business model and the organization’s resistance to change[1]. This incongruence captures perhaps one of a board’s most fundamental fears. No established incumbent wants to fall into the category of companies that were yesterday’s success stories but today are in decline, suffering “death from a thousand cuts.” Yet it happens all too frequently. One well-known CEO says it begins with “stasis” — a state of inactivity that leads to “irrelevance” and is followed by an “excruciating,...
Issue
103
05/2018
As if it’s a double-edged sword, the pursuit of aggressive environmental, economic and social sustainability goals presents both opportunity and risk. Likewise, a minimalist approach to sustainability is not without risk. This uncertainty and the growing interest of investors in sustainability performance warrant the board’s close attention As discussions of sustainability move beyond financial performance, they tend to spawn divergent views. Many frame the term as what constitutes responsible behavior in driving continued development and growth without deteriorating the environment,...
Issue
102
04/2018
Innovation is the lifeblood of every organization. An innovation culture is what sustains reinvention and breathes life into the organization itself. In the digital age, the board has an important role to play in strengthening and nurturing this culture. Digital transformation is disrupting entrenched incumbents and even whole industries as the pace of change impacts the performance of traditional business models for creating value. As the combination of high-speed, ever-connected networks and maturing digital technologies enhances ties between organizations and their various stakeholders,...
Issue
101
03/2018
Every board today faces the challenge of overseeing the investment of finite protection resources in an ever-changing cyber threat landscape. Our recent discussion with a group of active directors identified some interesting cyber-related topics germane to board oversight.   Cybersecurity is likely to remain center stage as a top risk as companies continue to expand their reliance on digital technologies to transform customer experiences and execute global growth strategies. In a recent global survey from Protiviti and North Carolina State University’s ERM Initiative,[1] more than 700...
Issue
100
02/2018
No more pervasive issue falls within the board’s purview than performance management — the process by which performance toward targeted goals is measured and monitored. Performance relates to virtually everything that is important to a company’s progress — execution of its strategy, the customer experience, investor expectations, executive compensation and the board’s oversight itself. Performance management is so integral to a board’s oversight, it’s easy to forget that it too is a process and, like all processes, can be effective or ineffective in delivering value. Given the complexity of...
Issue
99
01/2018
Protiviti and North Carolina State University’s ERM Initiative have completed the latest survey of directors and C-level executives regarding the macroeconomic, strategic and operational risks their organizations face. The top risks for 2018 provide interesting insight into changing risk profiles across the globe. Overall, 728 C-level executives and directors participated in this year’s global study, with 46 percent representing companies based in North America and 45 percent distributed across Europe and the Asia-Pacific region. The study participants revealed that their respective...
Issue
98
12/2017
The digital revolution currently taking place is transforming our world. Over the next few years, many organizations will need to undertake radical change programs and, in some cases, completely reinvent themselves to remain relevant and competitive. Is disruptive innovation sufficiently emphasized on the board agenda? Ask executives and directors about their biggest concerns, and chances are their answer will include being on the wrong side of disruptive change. As the results of our latest top risks survey indicate, the rapid speed of disruptive innovation and new technologies, as well as...
Issue
97
11/2017
The recent breach of a major credit bureau has raised serious questions about whether boards of directors and senior management are asking the right questions about actions their organizations are taking to protect themselves from cyberthreats. Are boards probing to discover what they don’t know? In September, Equifax announced a massive breach exposing the personal information of over 40 percent of the U.S. population. The company’s stock declined almost 14 percent after the announcement, and heads rolled over the ensuing three weeks — first the CIO and CISO and then the CEO. The pervasive...
Issue
96
10/2017
Assumptions about the geopolitical and regulatory environments are critical inputs into strategy-setting. If one or more assumptions prove invalid, the strategy and business model may require adjustment. The timing—whether the organization is proactive or reactive—is often a function of the effectiveness of its monitoring process. In June 2017, Protiviti met with 22 active directors during a dinner roundtable at a National Association of Corporate Directors (NACD) event to discuss geopolitical and regulatory shifts on the organization and its strategy and business model, and the board’s role...
Issue
95
09/2017
Now that the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has released its updated framework on enterprise risk management (ERM),[1] it’s time for companies to take another look at their risk management practices. In this issue, we summarize our views on how organizations should approach this process. While the concepts in the update aren’t new, the emphasis is markedly different, with a focus on what’s really important in maximizing the value of ERM. Since the 2007-2008 financial crisis, many ERM implementations have been oriented around answering three questions:...