We’ve seen a few gung-ho CEOs mess up, especially but not exclusively in banking, but ‘Boards of Prevention‘ in strategy+business asks what the heck the supervisory Board is doing to let such nonsense happen. If they are not warning about risk, they are just overhead. Though the article largely focuses on risk in banking, some simple principles seem more generally useful [let’s call them ‘threats’ to generalise beyond banking]:
- Give the Board an explicit threat manifesto – how to assess and respond to threats to the business strategy and performance.
- Give small executive teams responsibility to scan for and evaluate known and possible threats.
- Reach out more widely, to external communities [investors, academics, customers, employees …] to widen the scanning for threats.
I am reminded of a comment from a wise and successful CEO who told me “For any strategic initiative we might make, we always ask what is the worst that could go wrong – if that’s not too bad, or we can cope with the consequences, we go ahead; otherwise we drop it“.