Effectively managing risk in the boardroom
- In general, risk management is not well handled outside of a few industries.
- Board risk includes:
- Alignment, strategy, mindset, bias, knowledge, decisions, risk identification, leadership, culture.
- People usually look at risk as something that’s negative but we must consider the other side, which is opportunity.
- Opportunity management includes risk and an increase in risk can lead to gain. So you need to get the right balance.
- When thinking about your board’s appetite for risk you need to question:
- How effective is your board in this space?
- Is the board prepared to give risk an opportunity in order to grow?
- Is the board avoiding risk and approaching things with a closed mind?
- Is the board creating risk by avoiding it altogether?
- From a risk management perspective, you need to question:
- How can the board accept risk?
- How can it control it?
- A board’s biggest risk is making bad decisions so it’s essential to look at the process of decision making.
- When you make a decision as a board that shouldn’t be the end of it. You need to assess the decision you made, determine its impact and decide whether it was the right one.
- Risk should be addressed at every single board meeting.
- As a board director, you need to bring your EQ and IQ to the debate. If you sense something is wrong, ask questions. It is your senses that will help identify if there is a risk.
- Have two risk registers, one for the organisation and one for the board.
- Managing a crisis. A crisis will happen, the question is how soon and how bad.
- It’s essential to plan for different crisis scenarios, determine how you’ll react and know that you’ll never cover all scenarios.
- Risk management after a crisis. This is the most high-risk moment for the board because attention lapses after coming through a crisis. The most important thing to do now is to keep assessing the risks.
- What did we do well?
- What didn’t go well?
- What would we do differently next time?
What are the common risk pitfalls that most boards and directors encounter? Risk is inevitable in the boardroom, so how can you manage it?
Join Sharon Constançon, an experienced executive and non-executive director, for this free webinar. She’ll share the insights and tools you need to recognise risk when it arises in the boardroom. She’ll also address the global changes making the boardroom a more complex risk environment.
This will be an informative and engaging discussion with plenty of practical insights to bring back to your boardroom. We look forward to hearing your questions and seeing you there.
Sharon Constançon‘s client list includes regulated businesses including FTSE, SME, family, investment trusts, insurance, financial services, mutuals, health services, charities and the housing sector. Sharon has a well-attested reputation for providing confidential, straightforward, honest and effective board evaluations which have successfully empowered boards to improve their performance.
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