Your board and your assets
The Directors and Officers Insurance market is facing a crunch moment, and directors’ personal assets could be put at risk.
In light of the COVID-19 public health situation, the Institute of Directors (IoD) encourages New Zealand boards to ensure their organisations have crisis response plans in place and are ready to activate these as required.
According to the IoD’s 2019 Director Sentiment Survey, 65% of boards had discussed crisis management plans in the last 12 months.“It is essential that boards prepare their organisations for crisis — time spent now is time well-spent,” says IoD chief executive Kirsten Patterson.
“This is a good number,” Mrs Patterson says, “but we need all boards to be prioritising their organisation’s crisis response needs. Board leadership is vital – both in preparing for unexpected crisis and supporting management during a response to crisis.”
“Every situation is different and will impact on individuals in an organisation in different ways. From management teams to all levels of employees – the way a board anticipates and takes care of their people is even more important when a crisis strikes. This is part of directors’ health and safety obligation. And these situations are an opportunity for boards to signal that organisational values around caring for their people are important.
“Each board will need to assess their own organisation and its nuances but in terms of best practice there are some general guidelines that will help boards to navigate uncertainty.
Assess crisis impact
“If they haven’t already done so, it is best practice for boards to evaluate and anticipate the potential financial and operational impacts that a global health crisis such as COVID -19 could have on their organisation. This is important not only for the present situation but also looking out to the future. It is important not to under-estimate the role of uncertainty and stress on your organisations and to think broadly about how to implement mitigations that will help your organisation remain resilient. Any action should be based on reliable and official sources.
Clearly define roles
“In any evolving situation – and where you need to be responsive, clarity of roles is vital. The IoD recommends that boards take the time now to clearly define crisis-response roles for the directors and management.
“Great boards have candid conversations with senior management to establish clear expectations about their respective responsibilities in a crisis.
Reporting during crisis
“Timely updates are essential. Boards should ensure they clearly articulate expectations and outline how regularly they need to receive updates. The COVID-19 situation is rapidly evolving and boards need to understand how their organisation is being affected by COVID-19. It is important to set out and have reports on key agreed indicators on the effectiveness of efforts to mitigate risks.”
“Panic is not helpful but clear and direct communication is essential. Board’s should seek to understand the approach the organisation is taking to its communications and ensure that the organisation is striking the right balance. The goal is to ensure your organisation is keeping its stakeholders informed about any important impacts and is providing accurate and timely updates about the organisations stance.”