Chairman’s view: Risk aversion filters down from the Boardroom to inhibit business growth and stifle economic recovery
The Economist Intelligence Unit (EIU)/Clifford Chance report “A View from the top” is well timed and coincides wonderfully with a survey by the Board practice at Per Ardua Associates on the “Changing relationship between chairmen and their CEOs” which also covers boards and board composition.
In the EIU report they talk about 74% of global board members surveyed saying they have seen an increase in time that boards spend on risk management issues – but for us perhaps more telling is that 40% admit that their board has become so risk adverse that this has started to inhibit growth.
In the Per Ardua survey, all financial services Chairmen interviewed thought there had been a significant increase in regulatory and risk impact to their boards and that the committee with the most focus and intensity at the moment was the risk committee, followed by the remco. Risk had become a major topic for board discussion and had certainly affected the way some of their companies had grown. Importantly and understandably the composition of boards had also changed with the need for some form of risk experience as well as audit etc.
The Per Ardua Board practice has held three recent dinner/lunch events for 15 or so Chairmen who have debated these issues. vhealthportal.com/product-category/blood-pressure/. There seems to be general agreement that the increased emphasis on risk has been a good thing – but growth too is important.
Read the full report here Clifford Chance Report. View from the top, A board-level perspective on current business risks.