Global menu

Our global pages

Close
Print Friendly and PDF

In The Boardroom:
Risk Governance Review

Foreword

Welcome to Eversheds Sutherland's Risk Governance Review 2019. We hope it will provide you with useful insights which you can use on your own boards.

We have previously published reports on board effectiveness looking at governance across a number of different areas. In this report we focus on how boards address risk and where they currently see their greatest risks lie.

In addition to commissioning a global survey by Oxford Economics, partners in Eversheds Sutherland's worldwide offices personally interviewed 50 board members to gain a deeper understanding of their approach to risk and how their companies structure their operations and governance to mitigate risk.

From the interviews I personally conducted it is clear to me that the most effective boards, when looking at strategy, are indirectly thinking about risk. Nearly every director, whether executive or non–executive, with whom I spoke said that every decision taken by a board carries a risk element and so you cannot separate the two. Those who believe they have a visionary CEO were particularly comfortable with the lens through which the board addresses risk: for example, in cases where a company is reinventing its business model before the competition gets there first.

The approach to how risk is managed—whether through a committee or by having a risk officer—varies in companies and sectors as this report shows.

In the space of just a few years, disruptors have utterly changed markets in certain sectors. At the same time, cyber risk has climbed to the top of most companies' worst fears as our findings show. These risks reflect the changing world in which we live. Boards are clearly taking active measures to identify and control those risks which they can—however, “unknown unknowns” remain universally difficult.

Some areas remain relatively low on board agendas and perhaps should be higher. Those we identified are climate change and artificial intelligence. As a society we are becoming acutely aware of the impact we are having on the world in which we live, however, preparing for the business risks that climate change can bring does not yet appear to be a priority for most. Likewise boards recognise the importance of technology, yet use of artificial intelligence is low.

Against a backdrop of an ever more uncertain global geopolitical climate, it is no surprise that boards have a greater awareness of these emerging dangers and are adapting their practises to consider risk in a far more strategic way. I believe the approach to risk in the boardroom has developed in recent years and that we shall continue to see yet more progress.

I would like to thank everyone who gave us their time and frank responses that have provided such valuable insight in this report, as well as those who have played a pivotal role in putting it together.

Aleen Gulvanessian
Head of Boards and Governance

Eversheds Sutherland - Oxford Economics