PwC's “Questions to ask before forming a new board committee” suggests boards carefully consider board oversight structure and process alternatives and implications before deciding to create a new board committee to oversee the increasing number of emerging and evolving risks such as climate, sustainability, cybersecurity, and human capital. Alternative structures include delegating new issues to the existing standing board committees that likely already have responsibility for certain aspects of emerging or evolving risks, expanding the remit of an existing committee, retaining oversight at the full board level, or a combination of the foregoing. Additional considerations associated with creating a new committee include (among others) board size; director skills, capacity, and interest; and perceptions and potential siloing associated with a standalone committee dedicated to a particular matter.
Importantly, the piece reminds companies and boards that creating a new committee for every emerging or heightened risk that comes along is impracticable; as such, boards should carefully consider the options before moving forward.
See our prior reports: “Board Committee Structure Review” and “Nom/Gov Committee Considerations” and additional information & resources on our Board Committees, Board Practices, Risk Management & Oversight and Nominating/Governance Committees pages.
This post first appeared in the weekly Society Alert!