The COVID-19 pandemic crisis has heightened the board’s role in creating and delivering sustainable business oversight.
Who should be blamed when a once-profitable business goes bursts? Who is responsible for anticipating disruptive events and implementing mechanisms to overcome them? Is it the CEO or the board or both?
Disruptive events are always peeping at you. On 20th September 2020, a fire gutted the iconic Ivory Tower building at Makerere University, bringing many records and intellectual property to assets. Without an effective resilience and disaster recovery strategy and plan, the University would have come to its knees!
The coronavirus pandemic has shown that disruptive events can happen to any business at anytime in ways never imagined. How do you continue in business despite such disruptive events? You need to prepare for such events. And that is where disaster recovery and business continuity come.
Two of the primary roles of the board are going concerned (strategy and execution) and oversight (risk management and compliance). How do you create a successful business that outlives the founders, and is profitable and sustainable? How do you anticipate risks and disruptions and prepare for them before they happen so that you build resilience or the “ability to withstand shocks” in your business? Much as you may have an excellent strategy for optimizing the opportunities available and winning in the market, you need to have a situation where there’s a plan B. You must continuously ask yourself the big question – what if things do not go as planned? It’s increasingly difficult to anticipate pandemics or systematic disruptive events that affect the industry or the world at large.
Some risks cannot be anticipated. The only way is to create resilience in the business – if something happened, what we do? How do you continue providing a service your clients are used to despite the disruptions?
The owner of business continuity and success is the board. The board is supposed to provide insights that the executive might not have. At the board level, you must approve the Business Continuity Plan and Disaster Recovery policy, and its attendant budget to implement it. When the BCP/DR policy and strategy are approved, has it been implemented? Do the staff in the organization understand it and its respective roles? Most of the time, organizations have the policy but implementation is lacking. There is no disaster recovery team. There is no recovery kit to coordinate should an incident happen. It is common to find that BCP/DR policy and strategy have never been tested. The board must have a policy and approve the implementation budget to increase business resilience amidst disruptions.
A good board hires and supervises the CEO, who in turn must be competent to make the board’s role of oversight and going concerned easy. Does the board empower the CEO to do their job? No one wants a board that is micromanaging the executive – telling the executive what to do and what not to do. But rather, providing a picture of the vision and strategic outcomes, and challenging the executive with the right questions to provide practical, cost-effective solutions. That is what sets a great board from an average one.
Copyright Mustapha B Mugisa, Mr Strategy, 2022. All rights reserved.