Friday, May 24, 2013

7 Board Disciplines and 6 Risks

“Finally! A book about boards that isn’t boring!”  

That’s Patrick Lencioni’s endorsement of The Imperfect Board Member, a quick-reading, but thorough governance fable.  Using the power of story and humor, author Jim Brown guides board members through his seven disciplines of governance excellence:
   • DIRECT organizational performance
   • PROTECT organizational performance
   • RESPECT owner expectations
   • REFLECT on organizational results
   • SELECT your prominent leadership
   • EXPECT great board-management interaction
   • CONNECT for healthy board relations

At your next board meeting, PROJECT (sorry…couldn’t resist) these seven disciplines on the screen and ask board members to rate the board’s effectiveness in each area.

The “PROTECT” area addresses risk management—an often-neglected agenda item for many boards. Online value-added resources are referenced in the book, including this two-page, three-column summary of risk management issues in six critical areas: 
   • Strategic risk
   • Operational risk
   • Financial risk
   • Knowledge risk
   • Compliance risk
   • Reputational risk

To manage strategic risk, 
Brown says that boards should conduct 
a full strategic planning process every three to five years 
and review and update the plan annually.

Contrast the absence of risk management board discussions with what ECFA President Dan Busby observed recently. In his presentation on “Financial Integrity Insights for Ministry Executives and Boards” at the Christian Leadership Alliance 2013 national conference, Busby shared a stunning best practice of one ECFA-accredited organization.

At each meeting, said Busby, this board invested a full hour on risk management issues. They first identified three or four possible risks and then broke into discussion groups in each corner of the room. They concluded the hour with a summary report from each discussion group with recommendations on possible next steps.

Brown writes, “One of the primary responsibilities of boards is to protect the interests of the organization’s owners. This involves being aware of the risks the organization faces and applying tools to limit the potential impact of these risks.”

He adds, “Eliminating all risks is not the goal because with no risk there is no return. Managing the risks is a key role of board members as they fulfill the discipline of protecting the owners’ interest.”

Many Christ-centered boards, in discerning the interest of the owners, have determined that God is the Owner of their ministries.  Thus, risk management for the board member/steward has significant consequences—both in this quarter and in eternity. 

QUESTION: How effective, and disciplined, is your board in assessing risk in these six categories?

No comments:

Post a Comment