Rising Risks & Resilience: A Board Leader's Guide for 2025
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NACD Northern California
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Lisa Spivey,
Executive Director
Kate Azima,
Director of Partnerships & Marketing
programs@northerncalifornia.nacdonline.org
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About The Event
NACD Northern California and EY hosted an exclusive peer exchange and explored what issues are rising to the top of board and senior-management risk agendas for 2025.
Thank you to our moderator Robyn Bew and directors Cathy Benko, and Brian Hughes, for guiding us through a thought-provoking discussion about aligning boards and company leaders on emerging risks. Furthermore, a big thank you to our hosts Donoghue Clarke, Phillip Mazzie, and Joe Muscat.
Find our Key Takeaways Below:
- Understanding How Risks Surface: Boards need to understand how risks surface from employees to management, how they are discussed between the CEO and board, as well as within the board members.
- Identifying Emerging Risks: Boards should actively identify top emerging risks and compare these with those identified by management. It’s crucial to assess the likelihood of these risks, the company’s preparedness, and their potential impact. The board should dedicate time to outline and analyze the risk list. Typically, management may downplay emerging risks, but boards are better positioned to consider long-term threats. A deep dive into the top five risks often takes place in committee meetings, with a focus on monitoring and understanding the potential impacts and presenting these issues to the board to discuss further.
- Strategy vs. Execution: Alignment tends to break down not at the strategy level but at the execution level. Strategy can get lost as it trickles down through the organization, which is a risk boards need to be aware of. Review the company’s project portfolio to ensure that the projects align with the company’s strategy.
- Encouraging Debate on Risks: Boards should foster rich, open debate around risks. A collegial atmosphere can sometimes lead to a desire to move through the agenda quickly by agreeing, so it’s crucial for the lead director to have one-on-one conversations with board members to gather their honest thoughts and bring these into the boardroom discussions where necessary. Board leaders, including the lead director/independent chair and committee chairs, play critical roles here. Allocating dedicated time for deep discussions on risks is critical, especially for smaller companies that focus only on the short-term (90-day outlook).
- Educating Board Directors on Emerging Risks: Board members must educate themselves on emerging risks, and it’s vital to bring in external experts where needed and advocate for these issues to be included in board discussions.
- Leadership Risk: One of the greatest risks is leadership risk, specifically how the CEO manages risk and how shortsighted their approach may be. Boards need to be very aware of this and ensure CEO succession plans are in place if the CEO is not in alignment with the board. Board chairs must demonstrate courage and make tough decisions, even when not all board members agree.
- Scenario Planning for Unpredictable Issues: Being nimble in responding to unpredicted issues is crucial. Scenario planning and tabletop exercises with management are useful best practices. One approach is for management to run these exercises while the board observes and then provides feedback on how they managed the crisis.
- Managing Brand Risk: In today’s climate of cancel culture, brand risk management is crucial. Companies must have a crisis communications team and a rapid response plan in place.
- Staying Close to Customers and Talent: During a crisis, it’s important to stay close to customers and company talent to understand the best way forward. Clear communication channels between management and the board, including an escalation protocol, are essential.
- Assess the company’s risk culture: Can employees comfortably report issues to managers? Can board members express concerns? Is the culture solutions-oriented or blame-driven? Do employees feel psychologically safe? Consider implementing a regular “people pulse” survey to gauge employee sentiment on these matters and ensure the board has access to the unfiltered results.
- Mentorship to Understand Company Risks: Engaging as a mentor within the organization is a valuable strategy to better understand the company’s risk landscape.
- Compensation Committees and Risk: Compensation committees are increasingly focused on risk management, evaluating talent with a broader lens beyond just compensation. This is important for ensuring the longevity of the business. They must compare compensation with market trends, gather research, generate insights, and overall have a more external focus. The tone at the top can help reflect the organization’s risk values. For example, focusing on PSUs can indicate a short-term focus, when the focus should be on long-term goals. The compensation committee also spends the most time with investors so are well well-positioned to understand the needs of key stakeholders and define retention strategies.
- Risk Appetite Reporting: It’s essential to approach the identification and quantification of risk appetite in a similar way that companies do with performance metrics and KPIs: don’t stay high-level and develop specifics based on business impact (e.g., phishing email test results). These metrics should be refined over time to ensure they are meaningful.
- Addressing Risks to Revenue: Companies must consider new risks to revenue, such as shifts in how people search for information (e.g., using GenAI instead of Google). Many companies are underprepared for the direct impacts of emerging technologies.
- Navigating Unknown Unknowns: It’s important to stay curious and proactive about emerging risks. Attend conferences, observe competitive startups, and continuously educate yourself on technological innovations. This approach will help you understand the potential risks of not adapting to these changes.
- Customer Demographics and DEI: With the politicization of the “DEI” acronym and moves by the Administration and others against such programs, it's an important time for companies to evaluate their past initiatives to see their impact and decide on the best strategies to move forward. This is important for long-term risk planning as decisions will affect your talent retention and customer perception. Reviewing long-term customer demographics is an important factor to consider when discussing this topic.
Useful Resources
- America's Board Priorities 2025
- Board oversight of a resilient response to crisis
- Visit the EY Center for Board Matters website to explore more current and emerging topics
Thank you to our generous sponsor for hosting this dinner:
NACD Northern California
Contact Us
Lisa Spivey,
Executive Director
Kate Azima,
Director of Partnerships & Marketing
programs@northerncalifornia.nacdonline.org
Find a Chapter