Adaptive Governance: Board Oversight of Disruptive Risks
Build Your Board's Situational Awareness
The opportunities and threats posed by disruptive forces and events have the potential to make or break an organization’s ability to create long-term value. These issues need to be front and center on board agendas, but many boards are behind the curve: almost half of directors in an online NACD poll said their board’s tendency to focus on known risks (those that management has already identified) creates a major barrier to the board’s ability to oversee disruptive risks, and less than 20 percent expressed confidence in management’s ability to address risks in this category. The 2018 NACD Blue Ribbon Commission initiative is aimed at helping directors in all organizations to improve their oversight of disruptive risks, and strengthen their stewardship of long-term value creation in a fast-changing world.
Improve the visibility of disruptive risks in boardroom discussions
Risk reports should provide forward-looking information on changing conditions, including from sources outside the company.
Evaluate how well board culture supports oversight of disruptive risks
Consider how bad news is received and the board’s level of openness to nontraditional points of view.
Assess board composition and skill sets
Diverse boards that engage in ongoing learning activities are essential in a fast-changing, disruptive environment.
Devote board agenda time to deep dives on disruptive risks
Explore the use of scenario planning, simulations, and stress testing to provide input to these discussions.
The 2018 NACD Blue Ribbon Commission
SAGE Leadership & Strategy; Director, Biscuitville Inc., Diversified Trust, Martin Marietta Materials, NACD
Director, The Archer Daniels Midland Co., Camden Property Trust, Mosaic Co., T-Mobile
Director, Cognizant Technology Solutions, Ally Financial, Cubic Corp.
KPMG Board Leadership Center
Irene Chang Britt
Director, Brighthouse Financial Inc., Dunkin' Brands Group Inc., Tailored Brands Inc., Baybridge Senior Housing Inc.
Director, Advanced Micro Devices, Ericsson, Talend
Director, Aptiv PLC, HYPR Corp., the New York Genome Institute, the MITRE Corp., NACD, Ravenpod Inc., Quantexa Ltd., Sproxil Inc., Syracuse University
Marsh Global Risk and Digital, Marsh & McLennan Companies
Bill Easter III
Director, Concho Resources Inc., Delta Airlines Inc., Grupo Aeroméxico SAB de CV
Director, Informa PLC, Paychex Inc.
NACD; Director, NACD, Nura Health Inc.
Global Corporate Governance & Executive Compensation Practice, Sidley Austin LLP
Heidrick & Struggles
Director, Simon Property Group, National Bureau of Economic Research, US-Russia Foundation for Economic Development and the Rule of Law, NACD
Director, The Wendy's Co., Lockheed Martin Investment Management Co. (Advisory Board)
James Lam & Associates; Director, E*TRADE Financial, RiskLens Inc.
Director, Campbell Soup Co, Fannie Mae, Shire PLC, State Street Corp.
Mary Pat McCarthy
Director, Andeavor, Palo Alto Networks Inc.
Knowing the Unknown Disruptive Risks
Directors & Boards
Adapting to Future Trends
How boards can better manage disruptive risks
What Comp Committees Should Be Asking but Aren’t
About NACD's Blue Ribbon Commission Reports
Our Blue Ribbon Commission Reports (BRCs) are NACD’s annual signature publications that propose new principles and practices to address the most critical boardroom issues. Read more about the history and impact of the BRC report series here.