This is an unusually hard-hitting post by renowned governance commentator, Richard le Blanc. As he says in the beginning, ‘I am invited to observe and assess a board. When I do, I immediately see the red flags. I make hard-hitting recommendations, which have included the CEO and certain directors being fired. Why does it take me to do what the board should have been doing much earlier?’
What somewhat surprised me in reading the article was the extent to which he thought directors should dig into management territory to satisfy themselves with respect to conduct risk. I guess if you suspect something might be wrong then it’s entirely appropriate to nose around the operational side of the business to determine whether your hunch is right or wrong.
He’s using the Harvey Weinstein notoriety to address conduct risk, something we often overlook when developing our risk charts. Here are 12 suggestions he makes regarding conduct risk:
- Act on your hunch.
- Insist on proper whistle-blowing.
- Renew your board regularly.
- Do rigorous interviews and background checks.
- Remove management regularly from boardrooms.
- Act immediately at the first sign of an ethical lapse.
- Receive dis-confirming information on company culture and executives.
- Receive employee feedback.
- Look at how employees are paid.
- Protect yourself and the company.
- Benchmark your diversity and inclusion policy and practices.
- Be vigorous in your fiduciary duty.
It’s a quick easy read and the above suggestions each receive a brief paragraph in explanation.