Sample Board-Level Reporting: Scenario Analysis and Disruptive Risks

Directors can use this tool to benchmark the structure and content of board-level reporting related to disruptive risks.

BOARD-LEVEL RISK REPORTING

The 2018 NACD Blue Ribbon Commission encourages the use of scenario analysis to help the board and management team identify and assess disruptive risks. To support ongoing monitoring and reporting, companies may consider developing a dedicated dashboard that can help aggregate, analyze, and display the scenario analysis data, and other information about disruptive risks, in a concise and effective manner.

The following reporting components may be included in the scenario analysis dashboard (example depicted in Figure 1):

Newsfeeds and market intelligence that provide key business and industry developments, consumer and technology trends, competitive actions, and regulatory updates.

Performance and risk trending data that tracks key performance indicators (KPIs) and key risk indicators (KRIs) for disruptive risks. For example, a KPI for disruptive-technology risk might be the relative valuation of new tech-based start-ups versus incumbent firms. An increase in that ratio would indicate start-ups are rapidly creating more value than incumbents. A KRI might be the relative investment capital available to those startups as compared to incumbent firms. An increase in that ratio would indicate start-ups have the capacity to invest more aggressively.