Risk management involves the identification, assessment, and prioritization of risks and the application of resources to minimize, control and mitigate the impact of unfortunate events on a business. It is the job of a board to oversee that their management teams have adequate risk management policies and procedures in place.
Risks vary by company, and come in all shapes and sizes. Potential risks to watch out for range from cyber breaches to product recalls to unexpected executive resignations just to name a few. And when you include third party risks like potential supply chain disruptions, environmental risks or bribery and corruption, there is a lot to be aware of on the risk landscape.
Boards play a critical role in overseeing company risk. A thoughtful approach to risk oversight can bring real value to a company and its shareholders.