Avoiding – and rebuilding from – catastrophic governance failure
Uncertain, volatile times can place an added strain on an organisations structure and systems, in some cases leading to a serious unravelling and potentially governance failure.
But there are effective ways to rebuild – and key ways to prevent reaching the point of governance failure in the first place.
We spoke to a team of experts set to gather at Governance Institute of Australia’s National Conference in early September for a session on ‘rebuilding from catastrophic governance failures.’
We asked them to pinpoint their top strategy or piece of advice for organisations eager to avoid governance failure during turbulent times.
We also asked whether boards need to have a stronger focus on risk management to help avoid the kinds of failures we have seen recently.
Here’s what they had to say:
Bravery Trust Chairman and Iraq veteran, Garth Callender:
“Don’t leave anything to chance – highly trained military leaders expect things to go wrong… and prepare. From my experience, I have often seen Australian business leaders with the opposite mindset – a view that nothing will go wrong. Rarely is this true.
“I love the Australian optimism bias, but it must be backed up with detailed preparation to understand risks, scenario modelling and contingency planning for the worst case. Only then can you be certain ‘she’ll be right’.
“[It’s not just about having] a stronger focus on risk management, but a more agile approach to managing risks.
“The environment is changing so fast, and with it comes new, unforeseen, and often immediate and overlaid risks. I have seen some really progressive thinking over the last 18 months – boards that quickly adapt by standing up sub-committees to address a specific situation or change in their environment, as it occurs.
“Of course, not only does this best protect the organisation, it ensures opportunities can be exploited when they present.”
Lutheran Services Chief Executive Officer, Nick Ryan:
“Organisations in the aged care sector must focus on the experience, the choice of care, the transparency of information, the feedback – quality feedback from our residents and their representatives – in the design and the broader delivery of care.
“Governance team members need to be immersed in the lived experience of the people for whom they deliver care.
“Senior executives need to be immersed in the lived experience of people who receive care. Because that gives you an authentic and an independent insight.”
Suncorp Non-executive Director, Lindsay Tanner:
“[For boards, it is important to] understand the fine detail of your business activities. If a board doesn’t know enough about what is happening it is difficult to adequately fulfil its core function of oversight of management.
“The risk function [in an organisation] is obviously critical, but it is more an art than a science in some areas.
“The critical question is not so much one of aggregate resources, but how they are being deployed. What risks are you actually looking at?”