For boards of directors, the current economic environment has brought its own share of challenges. In fact, according to a recent survey of directors, 59 percent agreed that the number one thing that keeps them up at night is unknown risks.1 With uncertainty prevalent in the current climate, do board members feel capable of meeting their responsibility to oversee significant, high-level risks?
The economic crisis has brought its own set of risks. With the ups and downs of the financial markets, corporate scandals, and the public push for greater regulation, directors are facing new challenges. In fact, 9 out of 10 directors believe there will be greater regulatory oversight stemming from the economic crisis, and 64 percent of directors believe shareholders will have an increasing influence on boards.
Not surprisingly, then, directors say their personal liability is increasing. Whereas in 2008 only 38 percent of directors thought their risk had increased during the prior year, that number rose to 69 percent in 2009.
Despite such challenges, the majority of directors surveyed—88 percent—say they are capable of monitoring corporate risk. And their cautious optimism is evident in their desire for greater focus on risk. In fact, 66 percent of directors surveyed in 2009 say they would like to spend more time on risk management, up from 34 percent in 2008.
In the end, the buck does stop with boards, and directors know that. Even though they are on the front lines of some new challenges, directors seem ready to spend more time monitoring significant risks.