Tools to help boards oversee strategy and risk

By Gillian Lees

Ask most company directors why they joined a board and you will hopefully get a response along the lines of, ‘I have skills, knowledge, experience – and above all – enthusiasm to make a valuable contribution to the long-term success of the organisation’.  (I have heard of one director who described board meetings as a good opportunity to go into town for some shopping and lunch, but we’ll let that one pass.) Not surprisingly, surveys tend to show that directors want to spend more time on strategy and risk, but it can be difficult due to crowded agendas and a lack of good tools and processes.

That’s why we offer three tools to help improve your board’s effectiveness.   What you need to know is:

  • They can be used singly or in combination with each other;
  • They are flexible enough for  you to tailor to suit your organisation’s specific needs;
  • They can be used by both board directors and those who support them.

The CIMA Strategic Scorecard® framework provides a simple but effective process that helps the board to focus on the key strategic issues and most importantly to ask the right questions in the following areas:

  • What is the organisation’s business model?
  • Understanding the external environment
  • Identifying strategic risks and opportunities
  • Generating options and making strategic decisions
  • Overseeing implementation.

The framework helps the board to see the ‘big picture’ and to understand what information it needs to address each aspect of strategy.

The board mandate was developed by the Tomorrow’s Good Governance Forum, of which CIMA is a member.  The mandate is basically a working charter that captures the essence and distinctiveness of the organisation.  Its real value lies in the comprehensive discussion needed by the board to establish what the organisation really stands for and once developed, it can be used as a framework against which to judge major decisions such as acquisitions.  A really good tool for boards which are trying to put an organisation on a stable footing after a crisis.

And finally the AICPA risk governance tool for strategic oversight helps boards focus on risk more effectively.  Greater complexity and economic turbulence means that boards needs to take an increasing role in risk.  The tool is based on the COSO enterprise risk management framework.  One bit of advice here:  make sure your risk map has space for the ‘unknown unknowns’!