The Role of the Board During a Crisis

Clients often ask us – “What is the role of the Board if we experience a crisis?”

Continuity Matters generally suggests that it is not good practice to have the Directors involved in the management of the crisis, as their primary responsibility is to the shareholders, not the operation of the business. Much attention has been devoted to the separation of duties between the executive and the Board and that generally, it is preferable to maintain the BAU relationship between the two groups.

Our premise is that under BAU conditions, the CEO and executives have received the delegated responsibility from the Board to run the business, so if a crisis occurs, as members of the Crisis Management Team, they should also be responsible for:

• Minimising the negative impact of an adverse incident.

• Re-establishing BAU business operations as quickly as possible.

Importantly, the delegated authority of the executives on the Crisis Management Team should be clearly documented before the crisis strikes. In particular - paying ransom to cyber criminals, the use of legal privilege, Chair’s involvement in crisis communications and if a subsidiary of an overseas parent – which team has the final decision ?

However, as the crisis unfolds, it is critical that the Chair is regularly apprised of the crisis as it unfolds.

If during a crisis, the CMT is presented with a decision beyond its delegated authority, then the CEO needs to brief the Chair and make a recommendation on the best course of action.

In short, the relationship between the Board and the Executive should be the same as when there is no crisis.