COVID-19 & Board Oversight: Lessons from the Athena Community
Recently, Athena hosted a special Virtual Salon on board oversight in the age of COVID-19 led by Carol Coughlin (who leads our event series on financial acumen). She was joined by an incredible panel of experienced board directors: Caroline Tsay (CEO of Compute Software, board director of Coca Cola and Morningstar), Ellen Richstone (board director and audit chair of Superior Industries, Orion Energy Systems, and eMagin Corporation), Sharon Wienbar (board director at Resideo and Colfax Corporation), and Kristin Rivera (a global forensics and crisis leader & partner at PwC).
We came together to discuss the COVID-19 pandemic, a crisis unlike any we have experienced in our lifetimes — one that has completely disrupted the way we live and work. Members and their management teams are working with their boards to plan for the impact, the risks, and the risk mitigation strategies they can lean on to help their businesses navigate these unprecedented times. Read on for a few takeaways from our discussion.
Taking care of employees
- Increased spending on health and wellness. Covid-19 has encouraged global enterprises to input new procedures for health and safety guidelines. Supporting these efforts is a high-ticket budget item.
- Investing in new ways of conducting business remotely. For some companies, this has meant a fundamental shift in how they do business.
- Desktop as a Service. Companies are re-thinking how they support their employees when it comes to devices. Many companies are enabling their employees to use their own devices and investing in service components to fill the gaps.
- Frequent check-ins. Several boards are performing global check-ins on the health and safety of their employees, several times a week.
- Monitoring employee feedback. Some boards are keeping a closer pulse on hotlines where potential breaches of codes of conduct are reported.
Managing financial risk
- A heightened focus on cash preservation and liquidity. Forecasting has taken a new light, with rolling forecasts ranging from a few weeks to several months out, leveraging various scenario plans.
- Cutting non-essential costs. Businesses are getting creative, playing with various scenarios such as rotating employees on a furlough basis, striving to plan for cost-cutting ranging from 10 to 40 percent.
- Strategy shift. Companies must move fast to pivot and focus on areas where they can see growth.
- Let little things slide. Now is the time to focus on the big priorities. Let the little things slide; it’s not worth it to get distracted when teams are stretched thin.
Regulatory and legal impact
As many companies were preparing their year-end financial statements, the virus became public knowledge. This led the SEC to share guidance, calling the coronavirus a subsequent event and encouraging companies to address it with disclosures and the like. From a financial reporting perspective, this affects financial controls, testing of financial controls, thinking through logistical challenges, contracts, and more. Companies are making “wartime decisions” about whether they can stick with a supplier, or if they need to exit a contract.
And finally, there’s the anticipation of aid programs coming from the federal government and other sources. Companies are evaluating how they can secure the funds, and what structures may need to be implemented to remain compliant.
Americans are known for their innovation, ingenuity, resilience, and optimism. Companies are rethinking how they drive efficiency and productivity. They’re re-evaluating policy and how they care for their employees. For many companies, a downturn may be a big opportunity to jump ahead of their competitors, drive market share, and change the foundation of competition.