Non-Executive Directors: Being Prepared For The ‘Unexpected’

Article by Iain Newman, CMS

NEDs could be forgiven for feeling that they continually have to be on their guard against the unexpected (Black Swan) event which could come out of the blue at any point

In terms of assessing potential risks, it is important for boards (and particularly NEDs) to consider all of the circumstances, including the cultural and environmental angles, which may be more likely to lead to these issues arising, not least as some may not be as unlikely as they first appear. This article suggests some areas which NEDs may wish to consider based on recent examples and also offers some suggestions as to how to address any issues identified.

Areas to review: Do any of the following apply to the business?

We set out below some (maybe not so) obvious questions to look at:

What to do when an issue develops

The list of companies who have had “unexpected” problems (of different scale and severity) over recent years is growing, as is the spectrum of sectors affected : BT, Capita, Carillion, Conviviality, MITIE, Redcentric, Serco, Telit, Tesco to name but a few. It is critical that the company is in a position to respond in the (hopefully unlikely) event of one of these issues arising.

The company should ensure that it knows how it would handle an unexpected situation and address the following questions:

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