Board Oversight of Risk Requires Candor

Board Oversight of Risk Requires Candor “Collegiality can be the enemy of good board governance,” said Christine A. Poon during a NACD Chicago Chapter seminar on Global Boards and International Risk Management. She is Dean and John W. Berry Chair in the Max M. Fisher College of Business at The Ohio State University and board member of Prudential Financial and Philips Electronics in the Netherlands. She was formerly Vice Chairman of Johnson & Johnson.

Boards need to get the information they need and engage in rigorous discussion when it comes to oversight of a company’s risk management and growth.  “There’s no need to be disrespectful, but it is critical that directors get the answers they need to understand the issues.”

Fellow panelist Lisa A. Payne concurred.  “You have to train management to eliminate the mind-numbing presentations that go out in the board books and tell them that management should come to the board with a handful of overheads so that we can use our time together to get to the heart of the matter.”  She is Vice Chairman and Chief Financial Officer of Taubman Centers, Inc. and a director of Masco Corporation and Taubman and a trustee of the Munder Funds.

Executive session is a key tool for the board.  “We often begin with an executive session,” said Payne. “It enables us to focus on the key issues through the duration of the meeting.  We often meet again in executive session after the formal meeting.”