Dilemmas,uncertainty, risks,and board performance

This paper traces the origins of the words risk, uncertainty, governance and development and argues that a deeper understanding of each allows more effective decision taking in the boardroom. It argues that the role of the board of directors is to balance and rebalance continuously their irresolvable dilemma — ‘how do we drive our enterprise forward while keeping it under prudent control?’ It argues that it is the board’s role to focus on uncertainty, rather than risk, and this requires a different set of intellectual skills from board members to be able to cope with monitoring a range of diverse scenarios. This is crucial for a board to develop stronger ways of both leading their organisation and of ensuring the connectedness of the learning within and between the board and the operational unit’s risk taking. It advocates that to achieve this a board must develop new ways of learning — especially of thinking strategically and becoming more sensitised to the dynamics of their changing external environments. This will take them well beyond the comforts of their specialist managerial disciplines and into the true world of directing. The paper demonstrates the importance of continuous learning in reducing organisational uncertainty and risk. It uses the ‘Learning Board’ process and model as the central processor of both strategic and operational learning to create an annual rhythm for the board’s year.