Establishing the right level of board involvement can be a challenge at all times, but it can be particularly difficult during a crisis. A delicate balance must be maintained, and it can be hard for directors to recognize the fine line between being involved and being intrusive. Hopefully, many organizations tested their crisis preparedness plans before COVID-19 and are well-versed in responding, which includes well-designed board-level expectations, roles and responsibilities. Determining these during a time of the crisis can be daunting.
At a minimum, the board should be appropriately positioned to provide guidance and oversight as the COVID-19 crisis plays out. Special board meetings or conference calls are likely to be necessary over the next several months, with contingencies in place in case a quorum is not available. Obviously, all board activities, including possible executive sessions, should be documented in board minutes and other meeting materials. As the financial distress increases, board meetings should be more frequent.
Many organizations might find it advisable to convene a special committee tasked with monitoring various aspects of the coronavirus crisis. In some organizations, more than one committee might be necessary, with the audit committee or a comparable group providing necessary oversight. In such cases, the committee with oversight responsibility should meet regularly with management and report back to the rest of board.
By asking appropriate questions of management and testing the underlying assumptions that drive management decisions, board members can meet their obligations to overseeing that the organization takes thoughtful, fact-based actions in response to the crisis. Because the consistency of public communication is so important, directors are usually advised to play a supportive, internal role, rather than serving as the public face of the company during a crisis.
For more on compliance and crisis management from Jonathan Marks, download his e-book “The continued evolution of best practices for compliance programs” here.