Boards will play a critical role in supporting management in dealing with this escalating crisis - both by acting as an informed and considered sounding board for immediate strategies, and by maintaining a broader stakeholder perspective for longer-term disruption mitigations and opportunities.
Below are 9 key areas your board should be considering.
- Focus on employee well-being
Current health authority advice aims to reduce the rate of the spread of infection. The board should ensure that management is applying local health authority guidelines to their organisation’s circumstances.
- Support existing BCPs and their adaptation to the COVID-19 health threat
Many organisations are activating existing crisis management measures that include plans for working from remote locations. The decision to lockdown an organisation, and activate plans for working remotely, needs to focus on employee safety. It may be useful for leadership teams to consider how their decision will be viewed retrospectively.
- Define roles and responsibilities for board and management
During a crisis it is important for there to be a clear understanding between the board and management of their respective functions. The board’s role in setting risk appetite and management’s role is implementing and monitoring risk mitigation frameworks, needs to be reinforced. This coordinated leadership maintains productive dynamics and efficient decision making.
- Assess the organisation’s exposure to financial, operational and strategic impacts
Consideration of the financial, operational and strategic impacts needs to happen in the short term as part of a crisis response, but also in the medium to long term as part of a disruption plan.
One of the nuances of managing a pandemic crisis response is that it impacts communities, businesses, sectors and countries at the same time and with growing complexity. Boards and management should co-ordinate their crisis plans and business continuity priorities in terms of agreed decisions. There needs to be a coordinated approach towards tolerances and contingencies around meeting established financial budgets and pursuing established key operational plans. Boardroom strategic considerations should take into account the potential impact of insolvency safe harbour provisions.
- Set clear reporting expectations
The board should ensure there is robust and effective information flowing from management. While it’s critical to receive accurate information on the impact of the virus to the organisation, the board should also be mindful of the tension between real-time reporting and allowing management the opportunity to gather and distil information that is changing on a daily basis.
- Evaluate management’s internal communication plans
As part of a BCP plan, management will need to implement a communication plan with employees that addresses their concerns and guides productivity. The board should ensure that this plan is rolled out in a comprehensive, coordinated and timely manner, and that it is regularly evaluated and adapted to meet the pace of developments.
- Consider what external communication approach is required
The organisation's external stakeholders will require timely and transparent information and the board needs to balance this requirement with the need for time for themselves and their management to gather data, reflect and plan.
Organisations will be considering their contractual obligations, liabilities and exposures and should pay particular attention to force majeure clauses that could come into effect. Such clauses may permit delays or failures of work resulting from events outside of the reasonable control of the affected party or an act of God, and can leave organisations with little or no option for recourse.
By planning for any potential legal impacts and committing resources to mitigating adverse consequences, boards can significantly reduce the negative impact of such an event.
- Begin planning for long term disruption
While many organisations have activated their crisis management plans, it’s equally important for boards to gather their thoughts on what the medium to long term environment may look like for their organisations. Prudent risk management will consider long term impacts of this disruption to creating value, financial forecasting, supply chain, strategic evaluations and future workforce availability and requirements.
These key areas of focus for business continuity emphasise the fundamental relationship between board and management.
During a crisis, leadership teams must unite to address urgent decision-making and plan implementation, and good governance practices reinforce that the best outcomes are achieved through thoughtful collaboration between the board and management.
We will continue to update our governance resources on managing the COVID-19 pandemic crisis in the coming weeks.