The corporate governance role of a board requires oversight, understanding, and foresight. Board directors need to be more vigilant and take informed decisions as the business environment becomes increasingly complex and unstable. It also requires coordinated efforts by all employees to ensure success.
A well-formed board must include members with a range of skills and perspectives, who are willing to challenge the board’s assumptions and viewpoints. This will help facilitate more comprehensive discussions and improve the effectiveness of the board.
As the board’s duties continue to evolve it is crucial to be ready to address the new technology and issues such as climate disclosures and diversity that could impact a company’s bottom line. It’s also crucial to establish an environment that promotes and encourages continuing education and punishes complacency.
The board must establish strategic goals and objectives both in the short- and long-term and implement mechanisms to track the progress toward these goals. The board also oversees the chief executive officer and establishes the guidelines and policies that govern the operation of the company.
It is the responsibility of the board to determine which risks are acceptable to take and how to manage them while safeguarding shareholder interests. The board should develop risk assessments, develop guidelines to guide its own actions as well as those of the manager, and establish accountability systems to help the board fulfill its duty of stewardship.