In Chief Executive, Richard Levick offers advice to board members on navigating the changing social and political expectations that companies as brand activism becomes more prevalent in the years to come.
One thing is certain coming out of 2020: The global pandemic and recession will be followed by new challenges in the years to come—and if the past year-plus has taught boards anything, it’s that they have to find better ways to forecast those financial and non-financial risks and opportunities. As the world slowly returns to some semblance of normal, boards are engaging in some fundamental introspection about how they could have been better prepared, and how to best anticipate what might still lie ahead.
“The very first question on the minds of every board and every executive team is, how are we conceptualizing this ‘new normal’?” says Leo Tilman, author of Financial Darwinism. “There are so many moving parts, and one of the key questions is, what are the changes—in the market environment, in consumer behaviors, in the B2B landscape—that are permanent and which ones are transitory. A lot of conversations about strategy and big-picture pivotal decisions are based on the answer to this question.”
But given the many new risks facing companies, including the proliferation of cybercrime, the heightened focus on ESG and the reputational and brand risks in the era of cancel culture, boards must work with management to find opportunity in the uncertainty. “It’s not, how do you assume a better fetal position so you can withstand the next outrage, but how can we dominate environments like this?” says General (Ret.) Charles H. Jacoby Jr., Fifth Commander of United States Northern Command and the 22nd Commander of North American Aerospace Defense Command, who spoke recently at CBM’s annual Board Risk Summit.
To do that, boards have to resist spending too much time focused on the past, says Evelyn Dilsaver, director with Tempur Sealy, Health Equity and Ortho Clinical Diagnostics, who recommends looking at the headlines of negative events happening to other companies “and really peeking around the corner to see what risks are not being covered, whether broadly through the company or within the committee structures.”
Jacoby, who, with Tilman, coauthored Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption, offers a military lesson directors would do well to heed: “We’re brought up to believe that the worst thing we can do is to be planning to fight the last war and not the next war.” He says the military does three things well—and which companies need to do better at—to forecast risk…Read more