The article provides examples from NASA (HST), Volkswagen and Wirecard to show how boards are prone to miss early warning signs that could lead to a risk. It stresses the importance of not just not recognizing these signals but to take action on them. This can be accomplished by the proper management of a board review process, which helps boards evaluate their own effectiveness and performance.
The authors stress the necessity for boards to look at their own performance, and the performance of the of the organization, to find gaps and opportunities for improvement. They also stress the importance of leveraging the expertise of outside consultants to ensure that the agenda of the board is complete.
A board room review is a re-evaluation of the effectiveness of the board of directors when compared to the ideal demands for the business. It could be an annual internal review using a low-cost world-class benchmarked questionnaire such as the ones from Board Surveys or a more specific external assessment that is customized to the specific needs of the business.
It is vital that the boardroom be an area where members are able to freely and honestly. They must be able to focus on their work without being distracted or interrupted, and feel comfortable discussing sensitive issues. A conference room with big tables and chairs that are trestle-style can be useful. It should also be an environment that is soundproofed to ensure that conversations are kept private. Modern technology like Bloomberg plug-ins or most current quotation systems can help. Virtual meeting rooms can allow participants to attend meetings at their offices, homes or even planes, helping to make the process more convenient for them and their colleagues.