Mazars in collaboration with Board Agenda and INSEAD has surveyed how boards maintain oversight of, and ultimate control over, risk in their companies.
We have asked C-suite executives and non-executives – including chairs, chief executives and group finance directors – about their preparedness for a pandemic in the wake of the Covid-19 crisis. At the same time, we have gauged their changing attitude to risk and their views of the wider current risk environment. The findings are revealing.
The survey reveals almost 60% of firms have revisited their strategy, and highlights a lack of board knowledge about key risks—including cyber security & climate change. Almost 60% of companies are reviewing their business strategy as a result of the pandemic, whilst 43% of senior business leaders say Covid-19 is a fundamental threat to their organisations, according to new risk research.
Covid-19 insights include:
- Boards are split evenly on whether or not they have a crisis management committee. Those that do not have a committee say that crisis management is either a matter for the whole board, the executive, business continuity group or specially convened “Cobra” teams.
- Only 55% are able to say they were prepared for a pandemic, though a resounding 96% say their controls and processes have performed well during the crisis.
- Eight out of ten are confident their response to the crisis has been clearly defined, communicated and monitored.
- Some 43% believe the pandemic is a fundamental threat to their organisation.
- Nearly six out of ten are reviewing their business strategy in response to the crisis, while a similar number are working on their post-pandemic strategy.
Risk management insights include:
- Seven out of ten believe their board is sufficiently skilled to address all the risks in its market sector.
- Nearly three-quarters have experienced unexpected and unanticipated risks during the past five years, while almost nine out of ten believe they are facing more risks than five years ago.
- Half have changed the diversity of board membership to strengthen risk management challenges.
- Only half receive all the information required to consider all the risks faced by the organisation, with senior management and personal knowledge ranking as the most important sources of information.
- Regulation, compliance and financial risks are at the top of the board’s risk agenda, followed by reputation and cyber risks, with climate change at the bottom of the list.
“The crisis has been highly disruptive, and a key lesson is that we need to get better at scanning the horizon and considering preparedness for the unexpected. Only 55% prepared for a pandemic. Boards need to ensure they have good external antennae on key risks,”
Matt Dalton, Head of Risk Management at Mazars, and Anthony Carey, Head of Board Practice.