New opportunities, choices & solutions for business growth.
This time we’d like to share an interesting article written by Dr. Leslie Gaines-Ross about the importance that reputation is achieving on Boards, at least, in the United States:
The second survey of Board Directors was just issued. The survey is conducted by Eisner Amper, audit, tax and business advisory professionals. They used their database and NACD’s Directorship magazine’s subscriber list of corporate directors. The survey reports on the opinions of 142 directors representing publicly and privately-held companies.
One of the questions they asked was which risks are most important to their boards, that is, besides financial risk (which probably begs a 100% answer!). The chart is below. At the top of the list is reputational risk — 69% said this is most important today. Reputational risk surpasses regulatory compliance risk (61%), CEO succession (55%) and IT risk (51%). I would posit that if this survey was done in the past few weeks, IT risk might have jumped up higher as a factor of major concern. The hacking and hobbling of computer networks at Boeing, Sony and the White House gmail accounts have had to certainly affect risk management concerns at board level. With regard to security risks, Eisner Amper wisely says: “The tools of today’s business heavily revolve around information technology, the Internet, the speed and degree of data transmission, and the pervasiveness of social media.” And everything that affects business affects reputation.
<strong>Aside from financial risk, which are most important to your boards?</strong>
Reputational risk 69%
Regulatory compliance risk 61%
CEO succession planning 55%
IT risk 51%
Product risk 34%
Privacy and data security 33%
Risk due to fraud 21%
Outsourcing risk 14%
Tax strategies 14%
Another question they asked which I like was where board directors go to for new information. In the 2011 survey, the leading sources were company management, publications, Internet, accounting/advisory firms and conferences (at 33%). I liked seeing the importance of conferences among the other sources because I firmly believe that getting out of the office and listening to other points of views provide opportunities for thinking beyond the same old ways about the same old problems. I wish I did more of this myself. We all need to close the door on our silos. For board members, this is a good sources considering how the problems they face have to be on high boil these days.
Primary Sources for New Information for Board of Directors</strong>
Company management 73%
Accounting and advisory firms 36%
Personal network 33%
Law firms 17%
Consulting firms 11%
At the end of their executive summary, Eiser Amper concludes:
“Protect. Protect. Protect. Reputational risk needs constant monitoring and analysis of the broader issues…Brand, company and personal reputation can change overnight. The speed of today’s business was unimagineable in years past, but its impact is real and protection is the name of the game.”