COVID-19 continues posing critical challenges for nearly every form of business with many organizations suffering major disruptions in supply chains, human capital, and product demand. A survey from Ernst & Young LLP (EY) on this topic revealed a troubling fact: only 21% of board members out of 500 total felt their organizations were very prepared for an adverse risk event like the Coronavirus pandemic. Contrast this to the financial services sector where 80% of directors indicated their firms were very or nearly very prepared to respond to such events.
“COVID-19 began as a public health crisis; however, it has rapidly evolved into a significant global economic challenge as well, encompassing nearly every layer of organizations from human capital to supply chains,” says Steve Klemash, Partner, Ernst & Young LLP and the EY Americas Leader of the Center for Board Matters.
In addition to low preparedness, just 40% of board members stated satisfaction with the management of new and emerging risks due primarily to talent and skill sets as obstacles. This is a similar feeling found in the financial services industry, where 42% of directors said their firms are “somewhat effective” in the management of atypical and emerging risks. With these lackluster numbers, EY states that the time is right for board to challenge how talent strategies enable the transformation of enterprise risk management (ERM).
“Now, more than ever, it is imperative for boards and directors to adopt a new risk mindset and take a future-first risk approach so that they are prepared for even the most unpredictable issue,” said Steve Klemash, the EY Americas Leader of the Center for Board Matters and Enrst & Young LLP Partner.
With insight from this study EY’s experts stress that boards need to work with management to build risk resiliency and advance their risk oversight. Working together, both groups in a company need to evolve the board’s role in ERM, turn risks into strategic value, redefine their risk reporting to be in-line with the dynamic risk landscape, and reprioritize the top risks to keep pace with the market distribution.
