Emerging directors under pressure: inside a simulated governance crisis

When a digital failure struck a healthcare provider, how should the board respond?

That was the challenge put to members of the Young Directors’ Network (YDN) at a hands-on governance simulation designed to test how emerging directors perform when pressure rises and information is incomplete.

Facilitated by Craig Stobo CFInstD and supported by members of the Young Directors’ Network Steering Group and Jacco Moison, Head of Audit, Financial Reporting and Climate Related Disclosures at the Financial Markets Authority (FMA), the session placed attendees around fictional board tables at a health provider facing reputational, operational and ethical crisis – in real time. 

Participants later reflected that the framing encouraged a more values-led response.

“We talk about governance in theory all the time,” said one attendee, “but this was the first time I really felt the weight of it.”

The scenario: a digital failure unfolds

A new patient data system had just been rolled out without proper testing. Within days, it failed – corrupting medical records, disrupting clinical care and triggering alarm from the Ministry of Health.

Media leaks followed. The CEO was under pressure. Public trust was eroding quickly. The fictional directors around the room had to act – quickly, with clarity, and within their governance role.

Broken into working groups – simulated boards – some jumped into problem-solving. Others froze. But as the exercise progressed, patterns of good governance began to emerge.

Many participants aligned around core governance actions: paused the rollout, engaged advisors, issued a holding statement, had the chair and CEO front together, formed subcommittees, and prioritised contact with the ministry, funders, staff and community leaders.

Several groups took different approaches – some questioned the CEO’s competence and had the chair temporarily step in, while others focused on restoring internal communication channels and introducing whistleblower policies. One group split its plan into short-term actions for immediate control and longer-term governance reforms to rebuild trust.

Some directors reflected more deeply on governance capability: “This really made us ask: do we have the right people on this board for this moment?”

And for many, the biggest insight was relational: “The biggest learning was how the board and management work together when everything is messy.”

Key insights: leadership, values and control

Key governance lessons included staying calm, values-led leadership, testing controls, seeking independent advice, and maintaining clarity between board and management roles.

After the groups had reported back, Stobo reinforced the importance of leadership during a crisis, adding that directors must “figure out what’s going on down below”.

“And so you will have to go help management. You don’t know enough yet, whether the CEO is able to give you all the information . . . so you can’t make good decisions without information.” 

He reminded participants of the importance of organisational values at times of crisis.

“You’ve got to be true to your values and the organisation . . . if the public feels you’re shifting from those, you’ll go down in a screaming heap. So you need to be true to what your values are, so you can explain to the public why you’re doing things in a certain way.”

He also stressed the vital role controls play. “The system failed, so where were the controls initially to ensure the rollout was going to be exemplary?”

Moison expanded on how effective control environments – supported by internal audit, independent assurance and strong culture – can prevent governance failures before they occur. 

He said when introducing a whole new system, as outlined in the simulation, directors should check in with management: “What processes are you going to go through testing, et cetera, to make sure we’ve delivered something useful?” 

He also warned that poorly designed incentive structures can create unintended risks if boards don’t ensure strong mitigating controls.

Why experiential learning matters

This was the first time the Young Directors’ Network used crisis simulation in this format – and it won’t be the last.

The session reminded participants that governance is not about perfection. It’s about preparation, awareness and staying principled when things get messy.

And Stobo reminded participants that governance failures rarely start with a single mistake – they begin when controls and culture weaken quietly over time.

In a time when reputation can be lost in a single headline, this simulation served as a powerful case study in what it takes to govern with courage.