Book Review: The Board Member’s Guide to Risk

The Board Member’s Guide to Risk is a “must-read” for board members of all levels of experience, on boards of all types. Written by David R. Koenig, president and CEO of The DCRO Risk Governance Institute, it can serve as a valuable roadmap for boards to take a fresh look at how they oversee risk management.

Koenig rightly identifies risk oversight as a key board duty, but this duty is too often automatically assigned to the board’s audit committee, where it may become only a minor subset of the committee’s responsibilities. The entire board should be thinking about the company’s risk management, even if a particular board committee does a “deeper dive.” I agree with the author that having a separate board risk committee is an underutilized tool, and he points out how risk oversight should be an element of the work of all board committees.

Koenig parses risk into different types, including financial and operational. This can be a useful framework in helping to ensure that the board has had thoughtful consideration of all facets of risks that a company can face. The author points out that identifying a company’s key drivers of success may be a guidepost to recognizing the relative importance of various risks and how existing risks can change and new ones emerge, even if a company’s activities remain constant. 
In keeping with the growing awareness of ESG considerations and the potential interests of all stakeholders, the book also discusses how these factors could figure into the board’s risk oversight. It also includes valuable discussion about how the board might organize management to exercise risk management, for example with a chief risk officer.
The book’s value to boards is enhanced by its brevity — only 97 pages including a short appendix. This should help reduce any resistance if boards wisely distribute it to all directors as part of the board’s ongoing support of director education and development.
Howard Brod Brownstein is president of The Brownstein Corporation, a turnaround management and advisory firm, and regularly serves on the boards of publicly held and privately owned companies, as well as nonprofits. He is NACD Directorship Certified and an NACD Board Leadership Fellow. 

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