5. RECOGNIZE THAT CERTAIN OPERATIONS MAY BE SUBJECT TO HEIGHTENED RISK Industries that are subject to substantial governmental regulation or have operations linked to human health, life or sustainability issues – such as food, cannabis, pharmaceuticals, medical devices, mining and transportation – may be subject to greater risk that requires proportionately heightened and more active oversight. In those instances, assigning risk oversight to one or more subcommittees of the board may be appropriate. In particular, a monoline organization should ensure that robust controls are implemented and its “mission critical” operations and risks are closely monitored, given the importance of a single product or limited number of products to its operations. Consider, for example, some of the important governance lessons learned from Canada’s “Green Rush,” including the recent CannTrust Holdings Inc. saga, discussed in Chapter 9, Governance in a Nascent Industry: Lessons from Canada’s “Green Rush.” Creating a board committee specifically tasked with overseeing such product(s) or core risks may be advisable for some businesses. Ultimately, however, it will often be prudent for the full board to be actively involved in oversight of key risks or issues that are central to the business. 6. CONTINUALLY EVALUATE OVERSIGHT CONTROLS The evolution of operations or market circumstances, as well as the broader context in which a company operates, naturally necessitate an adaptive oversight function. A board should regularly evaluate its oversight practices and pressure-test key assumptions. COVID-19 has brought this need into sharper focus. Many issuers have had their established practices and procedures upended, revealing gaps or deficiencies in their internal controls and thus demanding rapid adaptation to implement new measures to reflect their new modes of operations. As of the date of this publication, COVID-19 is still testing every company’s business continuity plan (BCP). Once the crisis abates, boards should take the opportunity to conduct a post-mortem on its BCP’s relative success and continue to make business continuity planning a strategic imperative in advance of the next unforeseeable event.
Industries that are subject to substantial governmental
regulation or have operations linked to human health, life or sustainability issues – such as food, cannabis, pharmaceuticals, medical devices, mining and transportation – may be subject to greater
risk that requires proportionately heightened and more active oversight.
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Governance Insights 2020
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