19 October 2005

Business Risk: Grow or Die...

In the latest issue of Corporate Board Member magazine in a PricewaterhouseCoopers survey, the question is asked:

Has your board discussed what to do if the company is hit by a major crisis?

No - 51%

Yes - 41%

Not Sure - 8%

What is the definition of "Crisis" in the minds eye of the Board of Directors today?

n. pl. cri·ses (-sz)

1. A crucial or decisive point or situation; a turning point.

2. An unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change.

3. A sudden change in the course of a disease or fever, toward either improvement or deterioration.

4. An emotionally stressful event or traumatic change in a person's life.

5. A point in a story or drama when a conflict reaches its highest tension and must be resolved.

How can these numbers be correct? Why don't these results make sense?

It does seem almost impossible that just over half of those surveyed said that they have not discussed what their company would do in the event of a crisis. In light of the latest corporate governance and catastrophic events any board member who would answer no is either not attending the meetings or is so new to the board that they haven't been part of the conversations yet.

The survey of 1,103 directors who responded have illustrated many of the risk management issues that are taking up much of the shareholders time. They also indicate where they wish they were spending more time as 59% hoped they could be doing more "Strategic Planning."

Is there a correlation between those who have not been part of discussions of crisis management and the wish to focus more on strategy? We hope there is.

Our experience is that corporate management and the board need a 3rd party facilitating the mechanisms for change and towards the "Big Picture" of the future. If management sees the board as an overzealous parent and not working on behalf of the shareholders the tension increases. Once the board and corporate management have found a "strategic facilitator" to guide them towards a model of Enterprise Architecture everything becomes crystal clear. The factions now see the blueprint for change and the path to implement the strategy and tactics to achieve it.

At the end of the day, the goal is to continually grow and whenever that significant crisis or "Breakpoint" occurs, the engineered resilience of the business enables it's survival and the next phase of growth to begin.

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