Boardroom advice for handling disruptive risk

Question legacy business models

"Allegiance to legacy business models with reluctance to question their future viability" is a red flag, according to board guidance (Adaptive Governance: Board Oversight of Disruptive Risks, NACD, 2018).

ERM reaction: Include business model risk analysis in your risk assessment.

Board member reaction: Don't accept a risk map with a list of top risks. Ask if tools have been applied to examine the risks around the business model — in essence, the heart and soul of the business. Without a grasp of this, you are overseeing the wrong risk. Peter Drucker, a management consultant, educator, and author, wrote in "Theory of the Business" in the Harvard Business Review in 1994 that every three years we should challenge every product, service, policy, etc. — basically, every assumption about the business.