Broader Oversight Considerations for Boards
The current national climate has ushered in a unique era for boards of directors in both the corporate and mutual fund sector. Corporate boards are grappling with how to navigate the long-term fallout for business operations, heightened necessity to address succession planning for key executive roles, among other challenges. While fund directors are not involved in the day to management of a fund complex, frequent management updates should be keeping directors alert to how management is running the complex during these uncertain times. Lawyers from Skadden have written a comprehensive article on broader oversight areas that boards may consider with management. “COVID-19 will test the oversight skills of boards of directors of literally thousands of companies, of every size, in every business and in every location on the globe,” the lawyers write. “The new normal for an indeterminate period will, for most companies, present a set of difficult issues and serious risks that would have been unimaginable at the turn of the decade.” They list several lines of inquiries for boards and management to consider including:
Financial Impacts: What are the short- and long-term financial impacts on our business as best we can ascertain at this time? What are the most significant "known unknowns" that affect our forecasts? What is the assessment of our capital resources and liquidity position?
Workforce Impact: What is the status of our workforce and facilities? Have we had employees who have reported that they have tested positive? Are we shuttering facilities and/or closing operations? Are we getting expert health care advice — from internal or external experts — as we make these decisions? Are we considering layoffs or furloughs?
Third Party Impacts: Are we able to continue to perform our contractual obligations to our constituents?
Security: Recognizing that disruption caused by business responses to COVID-19 creates vulnerability to criminal activity, what steps have we taken to assure the security of our facilities in a remote working environment?
Federal Assistance: Are there potential governmental assistance programs that we may be able to participate in or help shape? How are we keeping abreast of these in each jurisdiction in which we operate?