Corporate Responsibility: Board’s role in COVID-19 risk management

Corporate Responsibility: Board’s role in COVID-19 risk management

Excerpted from Lexology by Akerman LLP

As states start to lift restrictions and allow people to “return to work,” companies are left to grapple with the specifics – the when, where, and how. The decisions to be made are not merely operational; they go to the core of the businesses balancing stakeholder healthcare concerns against economic ones. In many ways, the increase of board involvement in risk management and environmental, social, and governance (ESG) matters over the last decade has positioned corporate boards well for managing new types of risks. However, the magnitude and complexity of the current pandemic risk coupled with its evolving nature demands an intensified board process.

Most boards now have an established risk management process that identifies, categorizes and mitigates major risks. The pandemic risk should be viewed using this process – but the rapid accumulation of data and the shifting external guidance on response, including in many places’ laws and regulations, will not allow a board to complete a one-time risk review exercise. Instead, the review must be continuous, and the company’s response must adjust to meet the current demands. Boards will need to constantly monitor and adapt to lessons learned to assure that the heath protection standards it employs are based on the best practices available at the time.

Given the increase in epidemics in recent years, including SARS, H1N1 and Zika, it appears unlikely that COVID-19 is the last pandemic that our country and the companies within it will face. Pandemics present a major risk that boards must learn to oversee correctly starting with COVID-19. The board’s actions now can lay the groundwork for a dynamic, effective response to the current pandemic and any future outbreaks.
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