ERM News - New York Stock Exchange (NYSE) Governance Services Survey Identifies Key Risk Oversight and Strategy Issues
During the first quarter of 2014, NYSE Governance Services, Corporate Board Member and Spencer Stuart collaborated to survey the opinions of directors who serve on the boards of U.S.-based publicly traded companies. Key risk management issues were identified.
This wide-ranging NYSE Governance Services survey, currently in its 11th year, analyzes directors’ opinions on topics including board effectiveness, composition, education, governance policies, risk oversight, succession planning, compensation, and compliance oversight. The survey was sent electronically to a survey pool of directors from the NYSE Governance Services, Corporate Board Member database. The survey launched October 15, 2013 and closed November 15, 2013. A total of 592 responses were collected.
The highlighted key risk oversight and strategy observations include:
Increased emphasis on understanding of IT/cyber risk. Experience in overseeing the growing threat of cybersecurity risk is one of the key attributes boards will look for when appointing their next new corporate director. In addition, IT strategy appeared among the top five items directors would choose if setting the agenda for their next meeting.
Boards recognize they need a better grasp on risk. Thirty-nine percent (39%) of directors believe they could improve their ability to oversee risk if they had a better understanding of the risk oversight process itself. In addition, 44% say they could improve risk oversight if reports had more key highlights and fewer details, and 33% believe having a separate risk committee would improve risk oversight effectiveness.
Strategic Risk Objectives. Board members were asked a question "Are new strategic objectives always reviewed by the full board to ensure they align with the company’s risk appetite?" Over 87% said “Yes”.
Risk Oversight. Board members were asked a question "Which of the following do you believe would improve your board’s ability to oversee company risk?" The top answers included:
- Over 47% said they wanted more key highlights/ fewer details in management reports
- Over 39% said they wanted the ability to better understand how the board should oversee risk
- Over 33% said they wanted the ability to delegate risk to a separate committee to take a closer look at specific issues
With a variety of risk issues facing organizations, it is imperative to the C-Suite and Boards that specific risk profiles be developed and managed with continuous monitoring. “Dashboards” and "Predictive Analytics" with associated professional services allow the organization to see certain trends over time and allocate resources to risk mitigation strategies.