This report illustrates the current practice of board oversight of risk management, based on in-depth interviews with executive and non-executive directors. It highlights good practices but also challenges that leaders face and considers way forward.
Some of the key findings are:
- Board-level conversations and practices in relation to strategy and risk management take place along a spectrum, with many boards being nearer to one end of the spectrum or the other. The report describes the two extremes as the principled approach and the prescriptive approach
- Diversity (in its broadest sense) enables the board to understand the 'risk-reward equation' better. This diversity can be summarised as Risk Intelligence, Skills, Knowledge, Experience, Education, and Training (RI-SKeet)
- Barriers to making risk visible to the board fall within two categories; 'cognitive impediments', which reduce a board's ability to make risk-sensitive strategic decisions, and 'social obstructions', which suppress risk-relevant dialogue in the boardroom.