Confronting COVID-19 (March 7, 2020)

Confronting COVID-19 (March 7, 2020)

Board Lens

Confronting COVID-19 (March 7, 2020) 

In addition to sparking a global health crisis, the spread of the 2019 Coronavirus Disease has sent the financial markets reeling with the S&P seeing an 11.5 percent dip the week of February 24—its worst performance since October 2008. To oversee the rapidly evolving risk of this growing epidemic, an NACD BoardTalk blog post outlines five tactics boards should take to help their companies navigate the uncertainty. 

  1. Assess company exposure and potential financial, operational, and strategic impacts. The board should ensure that it has a robust understanding of the effect of the virus across all areas of the company, especially as it relates to employee safety. This includes working with management to assess what the greatest impacts are to all facets of the company’s operations, and where management believes they can work to mitigate risk.
  2. Define crisis-response roles and responsibilities for the board and management. A key component of crisis management is the clear delegation of the responsibilities between the board and management. The board should proactively work with to management to establish their respective roles during the crisis to foster healthy board-management dynamics.
  3. Ensure effective management reporting to the board during times of crisis. Directors should ensure that there is a robust reporting system in place so that they receive information from management on the spread and impact of the virus in a timely manner.  
  4. Evaluate management’s internal communications strategy. Boards should ensure that management has established how it plans to communicate with employees about the impacts of the virus without causing undue panic, which could result in additional reductions in productivity.
  5. Address the challenge of providing external stakeholders with accurate information as the crisis is evolving. Boards should focus on helping management strike the balance between transparency and timeliness while taking the requisite time to collect, synthesize, and communicate accurate information. The additional challenge here is deciding what information is material to investors at a time when information is constantly changing.

NACD Resources: 

As coronavirus continues to spread, NACD is creating and updating information around response planning and risk mitigation for boards. Read “Confronting COVID-19: Actions Boards Should Take” for additional information, relevant resources, and key questions boards should ask in overseeing risks posed by this disease. NACD plans to update this post as the crisis evolves. NACD has also released “Assessing Management’s Readiness to Respond to the COVID-19 Crisis,” a checklist for the board to use to assist management. For further information on the developing crisis visit the Emerging Issues Resource Center. In addition, our COVID-19 NACD member poll is designed to help us understand how your board is currently responding to the coronavirus crisis. This quick—and confidential—survey should take no more than seven minutes and your responses will help us better inform additional tools and resources for our members.