I have recently done a refresher “Safeguarding” course as part of my responsibilities as a school governor. Much is good common sense but several things struck me. First, it’s easy to forget the absolutely “obvious” and so being reminded of it and keeping it front of mind is essential. Second, good processes and adhering to them significantly helps to mitigate risk. Third, and perhaps most strikingly, behind all the horrendous high profile incidents where children have come to harm, there had been unheard and unacted upon warnings and clues that something wasn’t right.
And so it made me think about Board Effectiveness and risk management which is towards the top of any Board agenda. Boards need to be, and generally are, very thoughtful about how to anticipate, manage and mitigate risk. Risk can come in many shapes and sizes: reputational risk; financial risk; misconduct risk; risks around failing to attract, retain or develop talent; risk of executive underperformance, product risk, risks associated with changing markets, technology, customer base or distribution channels; cyber risk; failure to anticipate or respond to what is coming; governance. A risk is by definition something that might happen and if it does is likely to give you an unwelcome surprise. And it can be found lurking pretty much anywhere in an organisational system.
So like the school safeguarding incidents, a Board must ensure it has good governance and processes in place to anticipate, track and reduce risk. But there is in addition something critical about creating a culture where identifying potential risks and reporting them is acceptable and the norm. Once identified, crucially it needs to be the norm that concerns are listened to and looked into without fear of recrimination or unfair blame.
Generally when there have been high profile corporate failures, as part of the post event analysis, people have said that not only were the risks known but they were brought to the attention of leadership and simply not heard or acted upon. Leaders become deaf and blind because either they don’t want to hear or see it, or more likely they lose objectivity because they get used to how things are. They become insiders. Remaining open to feedback and concerns coming through the organisation and from key advisors is surely one of the greatest challenges and priorities for any Board if it is to mitigate its risk.
For more information, please contact Judith Nicol, Director of Leadership Services.