Why conduct
With the Global Financial Crisis and the increasing call for improved corporate governance and board accountability, right now is one of the most important times to carry out a world class Board Risk Survey.
Boards can demonstrate their leadership, their commitment to good corporate governance and accountability to stakeholders by conducting an independent review of their effectiveness in relation to their oversight of risk.
The ultimate responsibility for an organisation’s risks rest fairly and squarely on the board or governing body of an organisation.
Despite the many millions of dollars that have been invested in risk management systems and resources, risk systems continue to fail around the world, with disastrous consequences.
Most people understand the importance and benefits of a regular medical check up to identify any risks to their health and to determine whether their bodies are functioning to their optimal capacity.
In a similar way, Insync Surveys recommends the regular use of its Board Risk Survey to determine any risks to the “health” of the Board, and the extent to which it is functioning to its optimal capacity in relation to its oversight of risk. Whilst a Board Risk Survey is unlikely to prevent the failure of an organisation’s risk systems, it can be an important part of a risk assessment process that identifies weaknesses and areas for improvement in an organisations risk management framework, culture, systems and practices.
The Board Risk Survey was initially designed for large banks, finance and insurance organisations. It has also been tailored for Boards and governing bodies of public and private companies, government and not-for-profit entities.
The Board Risk Survey can be completed by boards, whether or not they have a separate audit and risk committee, or a separate risk committee. In such circumstances, a separate Audit Committee Effectiveness Survey and/or Risk Committee Effectiveness Survey may also be appropriate. A review of the board’s effectiveness in relation to risk can be done by using the Board Risk Survey separately or in conjunction with director and management interviews, reviews of the board’s charter, agendas, board papers, minutes and the like by experienced board and risk specialists.
The comprehensive report that is prepared following the completion of the survey is designed to measure the current extent of effectiveness and to highlight improvement initiatives.
Internally self administered surveys
Many of the small number of boards that conduct a Board Risk Survey use their own internal self administered survey to assess their effectiveness. Some of the limitations of using such surveys, however, include:
- they are rarely comprehensive in the issues they address
- the survey statements often are inappropriately worded and untested
- the survey process can be prone to bias and often lacks statistical rigour
- they do not promote candour as respondent anonymity isn’t protected
- without benchmarking or an appropriate gap analysis, the results are often incorrectly interpreted
