Crisis Preparedness and the Board’s Role

In a recent blog post on the Harvard Law School’s Forum on Corporate Governance, authors from PWC detail the role a corporate board plays in crisis preparedness. The post begins by stating “A director’s role is to ensure management makes the right decisions to support the long-term success and viability of a company.” The authors add that as part of crisis preparedness, boards should encourage management to “reflect on recent events and take a look at the effectiveness of its enterprise risk management program, crisis preparedness plan, and crisis response” which will benefit operations and shareholders. The post recommended the following actions:

  • Know your management’s crisis plan and ensure it is constantly updated and enhanced.
  • Ensure timely board escalation when a crisis occurs, identifying “triggers” for board notification.
  • Boards should consider periodically putting crisis preparedness on their agenda.
  • Review the planned communications strategy prior to a crisis.
  • The board should have its own crisis management plan that elaborates on governance structure, communication strategy, and temporary succession planning.

The post also emphasizes the importance of reviewing the response after a crisis has passed, noting that “Boards will want to have a candid and open discussion with management.“ Directors will want to understand the root cause of the crisis and discuss with management what was learned and how improvements can be made.