The Board's Role in a Crisis | Article

It is vital that boards of directors anticipate their role in a potential crisis.

Paula Reynolds, Chair of the National Grid, shared opening remarks at WIG’s recent roundtable on a board’s role in a crisis, followed by a discussion among leaders from across sectors.

In this article, we explore the dynamics of a crisis, ways boards should prepare for crises and what should be done when a crisis occurs in these insights from the event.

Key takeaways

  • The term “crisis” implies a moment in time or as unexpected. Crisis is more like a turning point, where pervasive or festering problems boil over.
  • The board’s culture must be honest and constructive so that concerns can be raised before a real crisis hits. Blame culture only increases the potential for crisis situations to develop.
  • During a crisis, it is important to have two teams with two tracks: one attending to the urgent and immediate and the other working on what is strategically important.
  • The outside perspective that board members bring is essential before, during and on the other side of the crisis.

Dynamics of a crisis

Crisis as a moment is a misnomer.  Usually, things are not going well under the surface before a crisis hits. Many organisations that suffer crises demonstrate traits of self-confidence and hubris. They may assert the strength of their risk management frameworks but tend to minimize factors in the external environment that could derail the firm.

Crisis preparedness

Life brings the unexpected.  To prepare for the possibility of a crisis, boards should be knowledgeable about the crisis preparedness work being undertaken and what the executives have learnt from the exercise(s).  In real life, there are examples where the CEO is not aware of a crisis as it is unfolding, but learning about it at the same time as the wider population.  As such, a board should ask that preparedness include scenarios that involve ambiguous situations where the lines of authority are disrupted.

 It is important to have a playbook for these scenarios – the crisis itself is no time for time to be wasted establishing communications protocols and role clarity.

Creating the right culture

The board’s culture must be one of constructive honesty.  Directors need to ask questions and not hesitate to seek outside opinions, so long as the confidentiality of the board is maintained.  Constructive honesty means that the purpose of questions is to enhance understanding.  Identifying accountability is very different than looking for people to blame.

The best boards understand interpersonal dynamics.  This means board members have a responsibility to learn about one another.  Understanding one’s board colleagues fosters an environment where every board member is empowered to raise issues including uncomfortable topics. 

Because boards are encouraged to come to consensus, “group think” can be a risk to boards.   To overcome this tendency, directors should pursue their questions until the answers make sense.  No board member should feel intimidated or rushed to judgment.  Building clarity creates a framework for constructive discussion.

Having the right leaders

Having the right leaders in place at the right time is key to avoiding or successfully managing through difficulty.  Thus, succession planning is undeniably the board’s highest impact responsibility.  Executive search consultants often say that the day to start succession planning is the day after appointing the current CEO.” It’s a great marketing pitch, but it’s also very true.  The loss of a key individual leader can change a company’s destiny, so being prepared at all times is essential.

Equally, board succession must be disciplined and ongoing.  Many boards use term limits to define the timing of appointments.  Such a process can result in candidates of significant talent and versatility being overlooked.  A board should always be building itself for long-term resilience. 

It is important to monitor boardroom dynamics and how those change with new leadership, changing industry issues, and board composition.  Board members should be aware of these dynamics and ideally, should evaluate their respective contribution to a board.   The UK nine-year term limit is for the determination of “independence.” Each director should be aware of their own interest, vigour, and value to the firm and their board colleagues.

When crisis occurs

Good boards should be “head in, fingers out.” In a crisis, however, the situation may demand that “all hands are on deck.”  Full immersion by board members may be needed for decisions that must be made quickly.  A good board is well-informed and stays closely knitted through a crisis; the best boards are ones that have previously invested in themselves so they can be ready for whatever unfolds.

During a crisis, it is important to have two leadership teams operating on two tracks: one attending to the urgent and immediate and the other on what’s strategically and operationally important. One might need to include outside legal advisors, media advisors, and experts in restructuring. Boards should also designate who is going to keep the board together and informed.  If the CEO and/or Chair are deep in the immediate situation, a board should decide who is going to carry the responsibility (Deputy CEO and/or SID, typically) for keeping the board informed and how the communications will be undertaken.  One wants to ensure that the board remains aligned, rather than risking that the adrenaline and speed of crisis will affect solid independent judgment.

Situational Awareness

Time is not on the company’s side.  The clock invariably seems to run faster when a company is in crisis mode.  The rhythm of the company changes, and unfortunately, the media cycle can be a driver of urgency.  The luxury of deliberative consideration will sometimes be sacrificed.  Board members must recognize that issues may be overlooked and mistakes made.  It is important for board members to resist undertaking the post-mortem before the crisis is over.

Review after a crisis

Timelines will vary based on the gravity of the situation, but understanding root causes is essential to avoiding a recurrence of problems.  Moreover, learning from one’s experience is part of the honesty that underpins strong organisations. 

Delegates agreed that if the situation merits it, external reviews can be helpful.  There should, however, be a thoughtful approach so that seeking independent input doesn’t lead to an endless array of matters being “investigated” in the aftermath of a crisis. 


If you would like to discuss any forthcoming recruitment requirements or have any questions on best practice, please do reach out to the Talent team – [email protected]  or see more information: Recruit a Non-Executive Director or Trustee.

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