Our Take: ERM Is a Strategic Imperative for All Boards The scope and magnitude of the COVID-19 crisis have thrown into sharp focus the central importance of risk governance. Regulators, shareholders and other stakeholders are calling for more effective risk oversight performance and disclosure. The pandemic crisis has also underscored the importance of rethinking strategy and risk management. In this sense, risk management should serve as the guidepost in an organization’s strategic planning process, providing direction on the level of risk a company is willing to tolerate in achieving its organizational goals. A robust risk oversight function cannot stop the spread of COVID-19 or the occurrence of a black swan event. But companies that have taken steps to plan for unforeseen, extraordinary events will be better positioned to recover from an adverse event and translate risk into a strategic and competitive advantage.
4. SUCCESSION PLANNING AND TALENT MANAGEMENT Low unemployment in the global markets generally, combined with changes in attitudes toward work, have created challenges for companies in attracting and retaining talent. We expect that companies will continue to face human capital challenges, including in their efforts to sustain a talent pipeline with the skills and expertise needed to adapt to a fast-paced environment. To excel in a digital age, companies need to ensure their workforces possess the necessary technical and specialized knowledge. Succession planning in particular needs to be considered from a more holistic perspective that extends beyond the role of a CEO. 5. REGULATORY UNCERTAINTY Regulatory change and scrutiny will continue to have a material impact on operations. According to a recent global survey of over 1,000 board members and executives spanning various industries, 22 there is an overarching perception that regulatory oversight is expanding, which is likely to lead to even greater disruption. Recent examples of significant regulatory change have occurred in the areas of privacy, the environment and social issues. In addition, recent geopolitical disputes have resulted in tariffs and other disruptive trade practices. 23 Not planning for regulatory change and scrutiny can result in unexpected costs to production and delivery, which will affect the overall financial health of the organization.
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Governance Insights 2020
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