Facets of Risk Panel - Corporate Directors Forum

The Many Facets of Risk

Facets of Risk – my abbreviation for The Many Facets of Risk: Threats Posed by Internal Cultural Issues – the topic of a panel at the Corporate Directors Forum I attended in San Diego in January. This will be the last of my reports from that Forum. Like all Corporate Directors Forums, Facets of Risk operated under the Chatham House Rule, so you will not find any direct quotes below. My notes include my opinions as well observations made by speakers, panelists and others in attendance at the Forum. While it is certainly not a transcript, I hope even those who attended the Forum will find the post useful, especially my attempt to provide additional context through links and commentary.

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Facets of Risk: The Panel

Facets of Risk: My Notes

Employee satisfaction surveys, turnover data, other employee data, consultants, hotline for employees/investors, board have own staff, ombudsman, exit interviews, engagement with shareholders. These were a few of the topics discussed. The parameters are crucial.

Culture is a core responsibility… perhaps the core responsibility. Most companies value freedom and diverse thought. How do we change those things that detract from value? It seems far harder to effect culture than to know what is problematic. Culture and governance feedback to each other. Culture should be a collaborative process. If a company is going to honor diversity, the board has to do so. Publish your values and live into them. Live into, instead of lean into. I thought it was catchy and important.

Red flags. Do the board and CEO eat their own cooking. Who’s watching? Is the CEO watching junior executives talking with directors. How do directors get their information? How does a company react to trouble? (Monks, I’m the trouble so how do they react to me) How companies respond to litigation. Need guard rails to stay out of the grey. Independent directors, compensation, gender diversity on board (less risk). Go onto Glassdoor and see what employees say.

Service notion. Have some sensitivity to stakeholders. Maybe ethics classes need deeper dive. How do you stand up when asked to do something questionable. CFA certification in governance. Need something beyond Stanford Directors College, which deals with current topics. Need to cover nuts and bolts.

How can shareholders know risk is addressed. Open board meetings sometimes, bring in lower level people, put it on the internet.

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