Board directors say their risk has increased since last year

According to the eighth annual “What Directors Think” survey released November 4 by PricewaterhouseCoopers and Corporate Board Member magazine, directors are very focused on risk: 69 percent believe their risk as a director has increased during the prior 12 months – a substantial jump from the 38 percent who answered so in 2008.  Seventy-five percent of directors surveyed also state that responsibility for risk management rests with the full board. 

Overall, respondents are cautiously optimistic about their ability to monitor their companies' multitude of risks: 88 percent of directors consider their board to be capable, and they rate risk first among responsibilities to which directors should pay the greatest attention, after their focus on profitability and shareholder value.  However, while most directors indicate they have sufficient board meeting time to comply with their duties as directors, 66 percent would prefer to increase the amount of time spent discussing risk management.

In addition to risk management, the current business environment is among boards' highest of priorities. When asked how their board meeting time should be spent, more than half (60 percent) of the respondents say they should spend more board meeting time discussing the effects of changes in the economy.

Yet, while directors want to spend more time on the uncertainties of the economy during their meetings, when asked, What keeps you up at night?, fewer than 25 percent say they worry about the ability of the CEO to manage through the current challenges.  Instead, 59 percent cite unknown risks in response to the question of what keeps them up at night.

Catherine Bromilow, a partner in PricewaterhouseCoopers' Corporate Governance Group, said, "Directors' focus on risk management is particularly timely, given our expectation that companies will have to provide new disclosures about their boards' risk oversight in upcoming proxy statements."   

Corporate Board Member president and CEO TK Kerstetter said, "Every year when the survey results are announced, we stress the importance of the key foundational duties of a board.  One is selecting and retaining the right CEO/management team and second is the responsibility of overseeing risk management, particularly catastrophic risk.”

Kerstetter added, "Even a board with a great corporate governance structure will be challenged this year by monitoring the risk levels of its organization, especially if they have global operations."

This marks the eighth year for the annual “What Directors Think” survey, which measures the opinions of more than 1,000 directors serving on the boards of the top 2,000 publicly traded companies (by revenue) listed with the NYSE Euronext, the NYSE Amex, and the NASDAQ OMX Group stock exchanges. The 2009 survey findings are highlighted in Fourth Quarter 2009 Corporate Board Member issue and can be found on the Corporate Board Member Web site at www.boardmember.com.