Women, Corporate Boards and risk managment

Women on Boards: hazard cards

As we proceed with organizing this board game, lets consider some of the hazards which a participant  might draw. 
What might be some of the reasons an Corporation might choose NOT to recruit a woman to it Board of Directors. 

• the fear that a woman might have a feminist agenda (what ever that is!)
• a lack of ambition (a perception just because she is a woman)
• lack of relevant education (although not likely, in this day and age because typically more women than men are graduating in Canada with advanced de and some professional degrees) 
• lack of leadership experience (in a particular industry..although this can be mitigated as we have seen in other posts)
• family responsibilities (also irrelevant, but bias knows no logic)
• possibility that her career path as a director will be interrupted  (because he is subservient to her partner's ambitions or because she might become pregnant...also not relevant as we have seen in the research)
• reluctance by the candidate to self promote
• lack of involvement in corporate networks
• lack of involvement in professional networks
• the Nominating Committee flat out refuses for no reason (so forget this corporation. It will close soon anyway)

Also in the career stack of cards would be statements as to why women are needed. 

• strategic input. Women may have much varied experience
• by adding women to the board, the Corporation has an opportunity to influence decision making and leadership styles (as the literature cited in earlier posts has noted)
• women appointed to boards can provide female role models and serve as mentors for women , herby getting more women in the pipeline for promotions
• women are better educated than their male counterparts (on average)
• adding women to the board will improve the corporate image with stakeholder groups including shareholders and particularly institutional shareholders
• adding women to the board will improve board behaviour
• adding women to the board will improve CSR compliance. 

One strategy which women may choose to employ to secure a position on a Corporate board would include:

• going the path of working within financial institutions
• securing a senior position (as a matter of career choice) within the Public Service
• securing a leadership position within a voluntary or a charitable organization (first at a local level, and progressing, finally at a national level)
• serving on a government advisory body (starting with an Agency, Board or Commission and then moving onto a Crown Corporation)
• serve on the Board of a major Arts/cultural organization for profile
• work and volunteer in a province with higher levels of female representation on the legislature
• run for office (and get elected). This is a different career path and one might want to start with the local Board of education, move onto city councillor, then mayor and the legislature..as a career path.

How might one work this strategy into the game??

If you want to copy what others have done, here are some interesting stats about female directors. Again, this might be the luck of the draw or a part of the overall strategy a participant might want to adopt to move into the position of corporate director

• 63% had been public company executives
• 17% had ben private company executives
• 6% had been consultants
• 5% had been academics
• 4% had been non profit employees. 

Tomorrow, I will touch on how to target the "right" sector and the "right" company to help serve your ambitions. 


Enterprise Risk Management: A primer

A few posts ago I touched on the term "enterprise risk management" specifically as it applied to our pension plan NBPSPP. Does the Plan have an ERM process? 

Not that it is saying--although that doesn't mean that it doesn't have one. Remember that CCGG, CICA and CAPSA all urge boards to have such a plan. But, what do we mean by ERM?

The Board of Directors has an overall responsibility for identifying and monitoring risks and ensuring that adequate control mechanisms are in place. NP58-201 3.4(c) states

The Board should adopt a written mandate in which it explicitly acknowledges responsibility for....the identification of the principal risks of the issuer's business, and ensuring the implementation of appropriate systems to manage these risks.

So, what is the role of the Board, exactly?
Setting the tone from the top that systematic and integrated risk management is valuable for understanding uncertainty in decision making and for demonstrating accountability to stakeholders. In this case that is us the retirees. This would be especially important given that the Plan's model focuses on shared risk.

So, what is that shared risk and what do we as retirees get to say about the risk model, how it is implemented and who is ultimately held accountable if the model fails...or is not implemented properly.

So, we, the retirees , under this model, would get a say in determining the best way to implement the Integrated Risk management Framework.

To do that, the Board would need to implement a supportive learning environment, not only for themselves but also for us, the stakeholders. This would include sensible risk taking and learning from experience.

It is important that risks are ranked, and that the appropriate risk management strategies are in place to protect our investment.

Finally, it is important that there is a capacity to report on the performance of the risk management function. But, within a Pension Plan, ours or anyone's, how is this done?

That.... I do not know. I would appreciate comments. 



Why the Pre-occupation ??

There are few reasons for a pre-occupation with risk management within a pension plan. If the board screws up, its us, the retirees who fail, need to go back to work, starve or, perhaps even dies (check out what is happening to the Nortel retirees or , more recently, the Sears retirees.)

1. Stakeholders have become more insistent on the predictability of the Plan's results and its impact on us.
2. Stakeholders expect transparency in decision making, reporting of risks and risk management and ethical conduct.
3. Unidentified or poorly managed risks can produce some adverse financial results..for which we, not the Board are penalized.
4. In today's bull market, and its global nature, Pensions face increasingly complex, rapidly changing an d inter-related risks. 

There are several benefits to the Plan and to us, as retirees, where an effective risk management program enacted.

1. Risk management improves Board accountability, decision making and transparency;
2. Risk management enhances stakeholder confidence that the Board is serving our best interests.
3. A R/M program reduces the likelihood of events that would have a negative impact on the retiree;
4. It enhances the value of the Plan;
5. R/M increases the likelihood of events that would have a positive consequence;
6. R/M identifies opportunities where taken risks can benefit the Plan.

So, if NBPSPP does not have a risk management program, where might the driving forces come from?

1. The retirees, as stakeholders. We would need to demand either in a special meeting with the Board or at the Annual meeting, that the Board be more transparent in its decision making.. and that we have a greater involvement in decision making around the management of the fund. 
2. Government. The government, who I suppose would ultimately be on the hook f the plan started to fail, would need to take an increased interest in r/m processes consistent with regulation and the recommendations of key informant groups listed above. It would also require increased disclosure of the Plan's activities. 
3. Auditors. Our external auditors, consistent with the requirements of the CICA/CPA would make that recommendation. The Audit Committee ought to be questioned closely at Annual meetings about the status of a ERM plan and processes. 
4. Activists. So, interested parties such as ourselves.