Good board members ask good questions.
Risk exists in every organization and it is a board member’s role to probe until they are convinced that management is not incurring any undue risk or risk that is outside of the boundaries they helped to establish. Board members must be cognizant of the lengthy list of risks that exist. Be it:
- financial risk,
- legal risk,
- human resource risk,
- governance risk,
- political risk,
- cyber risk,
- social media risk, or
- headline risk.
Overall, board members need to make sure that they are successfully overseeing risk, asking good questions, and ensuring there are other elements of good governance and risk management are place.
Guiding charters, bylaws, mandates, strategic plans, policies and procedures need to be formulated, implemented and updated regularly because they provide focus and direction to proper oversight and establish a framework and safety net for your board to operate within. Operating without these documents, or failing to update them, will not only put your organization at risk but will also increase your board’s liability. Often, board members don’t realize that guiding documents can help protect board members, if something was ever to go wrong. If something did go wrong, your Board must be able to answer “yes” to the following questions – it will go a long way in protecting board members and the stakeholders they serve.
- Did the board members act with loyalty, prudence and impartiality?
- Did the board members act within the guidelines of the existing and relevant policy or procedure?
Given the evolution of cyber threats, protecting confidential or sensitive information is an area that is relatively new to organizations. Over the last decade, many boards have evolved away from printing out and shipping board meeting packages to every member.
- With the emergence of email, many boards began to send out board materials electronically.
- This opened risks to email hacks, the ease of forwarding sensitive material, and fact that material remained accessible on lost or stolen devices.
- The provision of document repositories then enabled boards to store and access electronic documents on the internet.
- Many of these services were not secure which made them vulnerable to hacks.
- The emergence of secure digital platforms now enables boards to improve their document security while simultaneously enhancing access to electronic materials and inter-member and stakeholder communication tools.
- With enhanced security around access, and control, this next evolutionary step is proving to be the logical next step for boards that are concerned about mitigating risk.
Risk is a reality in all organizations and board members need to remain vigilant in its oversight. As seen in guiding frameworks and board materials distribution and communication, things will continue to evolve, and related risks will continue to change. Therefore, board members need to continue to ask good questions, and continue to ensure that their organizations are managing risk in a proactive way and doing what is necessary and required to safeguard themselves, as fiduciary leaders and the organizations they are entrusted to oversee.