Your company’s board of directors is charged with reviewing all kinds of risks to the corporation. But how well prepared are its members to do so? How ready are directors to evaluate, communicate, and act on risks — and thus to better ensure that their companies are doing a good job?
A great deal rides on the answers to these questions. Risk oversight of the boards themselves is what the Conference Board, a business membership and research organization, recently called the next frontier (pdf) in corporate governance. “If boards really understand how to take risks well, their organizations will do better,” said David Koenig, founder of the Directors and Chief Risk Officers Group (DCRO), an industry organization that formed after the 2008 financial crisis.
Responding to an overwhelming sense that boards didn’t accurately monitor risk in the time preceding the financial crisis, investors and directors themselves called for boards to