The Role of the Board in a Crisis

The Role of the Board in a Crisis

The frequency of crisis events has raised questions on the role of the Board before and during a crisis. Janellis have been working with executive leadership teams in building their crisis management expertise for over ten years and understand that the Board has a key role in preparing for and responding to a crisis.

The role of the Board is to provide oversight and governance during ‘business as usual’and during a ‘crisis’ event.

The Board’s main role, prior to a crisis occurring, is ensuring that their organisation is  prepared to effectively respond to a range of disruptive events.

Assurance needs to be provided to the Board so that they trust in the capabilities of the chief executive and the crisis management team. Members of the board need to be confident that the crisis management team can manage the strategic  requirements of a crisis.

Clarity of expectations is critical in this relationship. The crisis management team needs to understand before the crisis event, what the board members require during the crisis response, and how they will support the associated organisational response. Conversely, the Board needs to ensure the executive team are fully cognisant of their expectations relating to the agreed strategic intent.

Board members should resist the urge to make too many demands on managements time during a crisis.  The crisis management team members will have established relationships and processes and be best placed to understand the impacts across the organisation and to mobilise the appropriate resources.

An effective crisis management team should provide assurance and demonstrate critical thinking capabilities by: identifying the facts; identifying what is unknown; understanding the impacts across the organisation; considering most likely outcomes and worst case scenarios; identifying key stakeholders impacted and developing and communicating their plan.

This process will often take place with incomplete information and under immense time pressure. The crisis management team will ideally focus on managing the incident rather than managing the Board requirements.  However, one of the key activities of the crisis chair is to provide situational awareness to the Board through regular and effective briefings, enabling the board members to support the crisis management team to maintain shareholder, regulator and community confidence.

Depending on the nature of the event and to ensure that the strategic objectives of the organisation are met, the Board may be called on to:

  1. Become a ‘sounding board’ to the crisis management team for significant strategic decisions that need to be made.  This may be crucial to the effectiveness of the crisis chair and the crisis management team, depending on the size, complexity and scale of the crisis.
  2. Endorse the key strategic decisions and actions of the chief executive and crisis management team and provide Board level oversight regarding these key decisions.
  3. Liaise with key external stakeholders including the regulators, shareholders and the media, only as agreed upon by the crisis management communications team.

In what situations would the Board need to operate as a crisis team?

The role of the Board may change from a role of oversight to one of leadership where the crisis has a direct impact on the chief executive and/or their leadership team.  Questions board members should be asking at this time are:

  1. Are any members of the crisis management team implicated or impacted by the crisis?
  2. Do the crisis management team have the skills and capability required to respond to this event?
  3. Do the crisis management team need additional support?

If the entire crisis management team and their alternates are unable to lead a crisis, the strategic decisions will lie with the Board and they will need to assemble and direct a new crisis management team.

What can the Board do to prepare for a crisis event?

Members of the Board have a highly influential role in crisis management preparedness.  They should be asking targeted questions to executive leaders to ensure that an adequate level of preparedness has occurred and that capability exists at all levels within the organisation.

Key actions for the Board are to ensure that:

  1. Emerging risks are effectively monitored and that contingency plans are developed for significant emerging threats, as they are identified.
  2. The organisation has the demonstrated capability to respond to a range of strategic, operational, financial and environmental threats.
  3. There is a robust and strategic exercising program with scenario-based activities that develop critical thinking capabilities at multiple levels within the organisation including the incident, emergency and crisis level.
  4. The organisation has access to crisis, emergency and incident management tools to enable them to respond in a co-ordinated way that facilitates critical thinking.
  5. Members of the board understand how the organisation would respond to a crisis event, including key roles and responsibilities and; that board members have access to crisis management tools should they be required to lead a crisis event.

What is ‘better practice’ in Board level crisis management?

In working with organisations to develop a mature crisis management capability, opportunities arise to invite select members of the board to participate in the crisis management scenario-based activities.  The Boards role in these activities can be as an observer, a ‘player’ in the scenario or simply to be briefed, as a rehearsal for what would happen in a real event.

Customised hypothetical-style activities can be designed specifically for board members to build their capability individually and collectively.

Organisations with high levels of trust between board members and the executive team are able to work together to build and maintain a mature crisis management capability.

If you have any specific questions on The Role of the Board in a crisis please email me at Natalie.Botha@Janellis.com.au or read more about our crisis management training and tools here. To register you interest in attending an event on this topic please visit our Events page.