Specialist

The challenges facing boards in today’s business environmentThe current business environment places more responsibility than ever before on the actions and decisions taken by the board in leading an organisation through the many challenges it may face.

The onus is on all directors to ensure that legal and regulatory responsibilities are met and that decisions taken by the board are always in the best interests of the company.

Boards must be prepared for a range of challenges from anticipating the unexpected and planning accordingly, to managing risk and communication, whilst continuing to seek and capitalise on opportunities as they arise.

Legal and regulatory responsibilities

Regulation is constantly evolving and directors must keep abreast of any changes in the legal or regulatory environment that may impact upon their organisation. This is particularly important for the financial services sector where corporate governance regulation applies. It is not acceptable for directors or boards to claim that they were not aware of their responsibilities; the onus is on all directors to know and understand their duties.

Expect the unexpected

One of the greatest lessons that boards have learned in recent years is to expect the unexpected. It is the role of the board to challenge executive management, to ask the difficult questions and to anticipate risks to the organisation. When it comes to good governance, it is better to be well prepared than under prepared.

Balancing risk and strategy

The board has a key role to play in ensuring that the strategic direction pursued by an organisation will achieve long-term value, while putting in place appropriate risk management structures and processes to strengthen and protect the organisation. Risk management should encompass everything from operational, strategic and financial risks to the anticipation of risks from the external operating environment.

Stakeholders and sustainability

With a surge in shareholder activism, boards need to be cognisant of the impact of decisions upon all stakeholder groups. From setting executive remuneration, to corporate social responsibility and environmental and sustainability projects, organisations are answerable for many more policies pursued than ever before.

Communication

Communication is integral to how a company creates and protects its reputation, how it grows and how it manages that growth. The strategy that an organisation pursues will have an influence on its corporate reputation and so directors must be mindful of the consequences, unintended or otherwise, of decisions taken at board level.

By Maura Quinn, Chief Executive, Institute of Directors in Ireland



Further information on the role of the director and boards in the finanical services sector can be found in the jointly produced IoD and McCann FitzGerald publication ‘A Handbook for Directors of Regulated Finanical Services Companies in Ireland’.

The Institute of Directors in Ireland is the representative body for over 2,000 directors and senior executives within the private and public sectors. As the leading voice in the debate on improving corporate governance standards, the Institute of Directors is dedicated to developing and improving the effectiveness and performance of directors and boards throughout Ireland