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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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Where Were the Boards?

Jim Kristie, editor and associate publisher of Directors & Boards, whom I respect as highly knowledgeable about governance matters, made up his mind to this question, saying: “Frankly, boards have let down the nation and its capital markets. Boards have not had the right leaders in place; they have not adequately analyzed risk; they have not had the depth of knowledge of their company's operations that they should have had; they have not done a sufficient job of helping management see the big picture in front of them and in seeing around corners as to what lies ahead; and they have not acted smartly and speedily as conditions deteriorated and management faltered.”

Some may view that as a harsh assessment, but based on what transpired, challenging it is difficult. With that said, we can't know with certainty what happened in these firms' boardrooms unless we were sitting there as deliberations unfolded, and I wasn't. Still, we can readily speculate on what did or didn't occur, and several viable scenarios emerge. First, let's briefly review what responsibilities boards have pertaining to these and any other sort of risks. In brief, oversight involves a board that:

  • Determines whether management is appropriately identifying, assessing, and managing significant risks the company faces
  • Receives sufficient information that appropriate, disciplined processes are in place for this purpose
  • Is confident that management is bringing the more significant ongoing and ...

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