- Directors on boards with or without risk committees can use
the Blueprint to assess if their board and committees have the
mandate, members, information, and agenda necessary for expanded
risk oversight responsibilities.
- Establishing a dedicated board risk committee can be an
effective structure to enable boards to meet their expanding risk
oversight responsibilities. However, only 8 percent of Russell 3000
companies have a dedicated board risk committee.
WASHINGTON, June 14,
2023 /PRNewswire/ -- The National Association of
Corporate Directors (NACD), the authority on boardroom practices
representing more than 23,000 directors, in partnership with Marsh
McLennan, today published their Risk Committee Blueprint as
part of the NACD Future of the American Board initiative.
The Risk Committee Working Group, a panel of corporate board
leaders from NACD-affiliated organizations, as well as senior
leaders from Marsh McLennan, developed the Blueprint as both a call
to action for boards to elevate their risk oversight and as an
assessment tool for boards—with or without risk committees—to help
them execute on expanded risk oversight responsibilities.
"Enterprises today face an increasingly complex risk
environment, a demanding risk agenda, and rising stakeholder
expectations," said Linda R. Gooden, a Risk Committee Working
Group participant; director at GM, Home Depot, ADP, and others; and
former Lockheed Martin executive vice president. "Crises—including
the pandemic, supply chain disruptions, geopolitical turmoil, and
financial distress—have combined and reinforced each other,
stressing the reality that strong risk oversight is now a vital
board function at all organizations."
Against this backdrop, the working group recommends that
directors consider these four critical areas that will help boards
frame and elevate their execution of risk governance and oversight
to meet these challenges:
- Oversight structure. Boards must ensure that
there are clear committee charters that define risk oversight
responsibilities, roles, and the management structure and processes
to support those responsibilities, whether there is a dedicated
risk committee or not.
- Expertise and board composition. Some boards may
need to increase board education, the use of external advisors, or
a refresh of the board composition to meet an array of risk demands
and risk management.
- Reporting and communications. Improving risk
reporting starts with clarity on the board's risk responsibilities,
as this guides the necessary content, structure, and cadence of
information flow.
- Calendar and committee agenda. Despite crowded
board agendas, directors should ensure that committee calendars and
agendas allow time for discussions on emerging and evolving risks
and impacts.
Only 8 percent of Russell 3000 companies have a dedicated board
risk committee. As described in the Blueprint, for some
organizations a dedicated risk committee can enable a substantive
focus on risk and risk analysis, including emerging and non-defined
risks, optimizing risk management and its link to strategy. The
risk committee can also serve as an aggregator of risks overseen by
the different board committees to help ensure all risks receive
thorough oversight.
"In our work with clients, we see boards playing an increasingly
vital role in helping their organizations maneuver through
complexity by enhancing and strengthening their risk oversight,"
said Reid Sawyer, managing director
and head of the Emerging Risk Practice at Marsh Advisory, and a
member of the Risk Committee Working Group. "The Blueprint is an
invaluable tool for directors to help them assess if their board is
ready to execute on their expanded risk oversight responsibilities
in this unpredictable environment."
"Our goal with the Blueprint is to help directors develop a
deeper and fuller understanding of their companies' risk
management, especially as board oversight and responsibilities in
this area expand, and be prepared to take action in a crisis," said
Peter Gleason, president and CEO of NACD. "Each organization
must consider its own maturity, ongoing strategies, and particular
pressures, and should use the NACD guidance as a starting point
from which to develop a plan that best fits their needs."
A digital version of The Future of the American Board
Risk Committee Blueprint is available at NACDonline.org.
The Risk Committee Working Group is the fourth Future of the
American Board panel to publish a Blueprint guide this year,
following the Compensation (March), Audit (April), and Nominating
and Governance (May) committee working groups.
About NACD
The National Association of Corporate Directors (NACD) is the
premier membership organization for board directors who want to
expand their knowledge, grow their network, and maximize their
potential.
As the unmatched authority in corporate governance, NACD
sets the standards of excellence through its research and
community-driven director education, programming, and publications.
Directors trust NACD to arm them with the relevant insights to make
high-quality decisions on the most pressing and strategic issues
facing their businesses today.
NACD also prepares leaders to meet tomorrow's biggest
challenges. The NACD Directorship
Certification® is the leading director credential
in the United States. It sets a
new standard for director education, positions directors to meet
boardroom challenges, and includes an ongoing education requirement
that prepares directors for what is next.
With an ever-expanding community of more than 23,000 members and
a nationwide chapter network, our impact is both local and global.
NACD members are driven by a common purpose: to be trusted
catalysts of economic opportunity and positive change—in business
and in the communities we serve.
To learn more about NACD, visit NACDonline.org.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world's leading professional
services firm in the areas of risk, strategy, and people. The
Company's more than 85,000 colleagues advise clients in 130
countries. With annual revenue of over $20
billion, Marsh McLennan helps clients navigate an
increasingly dynamic and complex environment through four
market-leading businesses. Marsh provides data driven risk
advisory services and insurance solutions to commercial and
consumer clients. Guy Carpenter develops advanced risk,
reinsurance and capital strategies that help clients grow
profitably and pursue emerging opportunities. Mercer delivers
advice and technology-driven solutions that help organizations
redefine the world of work, reshape retirement and investment
outcomes, and unlock health and wellbeing for a changing workforce.
Oliver Wyman serves as a
critical strategic, economic and brand advisor to private sector
and governmental clients. For more information, visit
marshmclennan.com and follow us on LinkedIn and
Twitter.
About Future of the American Board
NACD convened the Future of the American Board Commission—a
diverse, influential group of seasoned board leaders from top
private and public companies and notable governance practitioners
from across the investor, regulatory, and academic communities—to
help guide boards through an increasingly turbulent and
unpredictable future. The Commission's perspectives and experiences
shaped a comprehensive framework for board governance centered on
10 Key Principles that boards can use and adapt to ensure they are
fit for the future. This framework, released in the fall of 2022,
is accompanied by a set of practical blueprints, focused on the
shifting roles of the key board committees, issued in the spring of
2023. Recognizing that committees are the engine of the American
board, and that good governance begins at the committee level, NACD
tapped world-renowned firms to help lead the Future of the American
Board committees. Partners leading these working groups are KPMG
(Audit), Marsh McLennan (Risk), Pearl
Meyer (Compensation), and Korn
Ferry (Nominating and Governance). For more information,
visit view.nacdonline.org/futureboard.
Press
Contacts
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Shannon Bernauer
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Susan Oliver
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sbernauer@nacdonline.org
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susanboliver@gmail.com
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571-367-3688
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703-216-4078
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SOURCE National Association of Corporate Directors