Strategic Risk Board and Management Process Support
Most of the board strategy and risk review meetings we have participated in over the past thirty years could charitably be described as “awkward.” On one side of the long, polished table sits the management team, who have worked hard to devise the strategy being presented and usually have a strong desire to present a confident, united front to the board. On the other side sit the directors, aware of their fiduciary duty to properly vet the proposed strategy and adequately govern its attendant risks, yet also trying to walk a fine line in their relationship with the leadership team, balancing between demotivating micromanagement and excessive delegation. The colorful description of such meetings as resembling “two porcupines mating” is often not far off the mark.
This situation is further compounded by the growing number of issues that make demands on the limited time available on board agendas, quarterly reports, budgeting, accounting, audit, and compliance. Too often, growing pressure on directors’ time results in strategy and risk reviews that leave them feeling frustrated, particularly in light of the difficulty of exercising their duty of care in an environment that is more complex and uncertain than ever before. Given these challenges, along with the new UK Corporate Governance Code requirement that directors annually issue their assessment of the principal risks facing a company and its long term viability, it is critical that board strategy and risk reviews are carried out as effectively and efficiently as possible.
Unfortunately, board processes in this critical area are sometimes deficient, and not just in the private sector. Consider the following findings from the Chilcot report on the UK’s involvement in the Iraq War:
“Analysis of the available [information] must draw on multiple perspectives, reflect dissenting views, identify risk – including that associated with any gaps in knowledge – and consider a range of options”…
“Regular reassessment is essential, to ensure that the assumptions upon which policy is being made and implemented remain correct”…
It was the “Ministers’ responsibility to ensure that measures to mitigate identifiable risks, including a range of policy options, had been considered before significant decisions were taken”…
“There is no indication of formal risk analysis or formal consideration of options associated with any of these events”…
“Where policy recommendations were supported by untested assumptions, those assumptions were seldom challenged”…
“Assumptions concealed significant risks”…
We work with Directors and Boards (including Audit and Risk Committees) to design effective and efficient processes that facilitate the productive discussion of strategic risk issues with management teams. Depending on the nature of the issues and the desire of the Board, we employ a range of qualitative and quantitative techniques, including pre-mortems, pressure testing against scenarios, and certainty equivalent cash flow analysis.
"Britten and Coyne brought highly effective methods for our board to identify and assess our strategic risks, and efficient processes for us to identify mitigation actions. They provided a structure and objective challenge to our board conversation that made possible an openness and depth of informed discussion that was previously difficult. I would not hesitate to recommend them"
"We got to apply new strategic risk concepts straight away to help our board productively address some critical issues facing the company. Very practical approach.”
"We liked that you went beyond what the board needs to do, and focused on how to do it and why you recommend these tools. Very much teaching us to fish."
"Got a much clearer view of how to identify, assess, and better address the real strategic risks we face.”
"Very interesting and constructive for our board.”
“Learning how to integrate governance of strategic risk into our board calendar was very helpful.”
"Helped management and the board finally reach consensus on strategic risks facing the company.”
“We’re having a discussion that was impossible before.”