The case of Gina Coladangelo’s appointment as a Non-executive Director (NED) at the Department of Health and Social Care (DHSC) by the Rt Hon Matt Hancock MP has hit the headlines recently. Besides the personal drama, the situation has raised general questions about the role of NEDs and the type of advice they give boards and senior executives.
NEDs should be there in major public-, private- and voluntary-sector organisations to offer advice as well as ask those challenging questions that put key decisions under the spotlight in order to help ensure the right outcomes. More often than not, the role and advice are of value but sometimes the challenges are misplaced or absent with serious results. What can be done to help improve the situation?
A helping hand
Resilience First has compiled a guide – Operational Resilience: a guide for non-executive directors – that identifies the key challenges that NEDs need to make in front of boards, and five key principles to help them tackle those challenges. The advice is designed to help a broader understanding of what makes organisations and the communities in which they operate more resilient and sustainable. Each section of the guide begins with a set of practical steps followed by the rationale for the topic and a case study which illustrates the challenges or principles described. A final section looks at the skill set required of NEDs to manage their role.
While resilience requires a compliance (regulatory) tool, it also requires one that includes long-term sustainability (sound investment), stakeholder engagement (strong social capital) and stewardship (good governance). Organisations using a combination of these attributes – alongside strong, effective and well-resourced managerial functions – will be better equipped to manage and mitigate the risks they face. Such strengths, if practised regularly like any exercise, can help build ‘muscle strength and tone’ for organisations.
In terms of regulation, the guide comes on the back of a policy statement on operational resilience from the Financial Conduct Authority and Prudential Regulation Authority in March 2021 that will take effect next year. The document clarifies the approach to four key areas of the regulatory framework: governance, operational-risk management, business continuity planning, and the management of outsourced relationships.
To emphasise the government’s broader impetus on the topic, the Department for Business, Energy and Industrial Strategy released a consultation paper also in March on proposals for Restoring trust in audit and corporate governance. It proposes to introduce a statutory requirement on public-interest entities to publish an annual Resilience Statement, consolidating and building on the existing going concern and viability statements.
A Chairman’ view
The Resilience First guide provides a platform to help NEDs in two ways: first, to channel their own insights and experiences on resilience; and, secondly, to make appropriate, timely and constructive challenges in boardrooms.
As the Chairman of Resilience First and former Chairman of KPMG, Simon Collins, writes in the Foreword to the guide: ‘it can be difficult for NEDs to know at what ‘altitude’ to operate – there’s a balance to be struck between leaving everything to executives on the one hand, and ‘grabbing the steering wheel’ on the other.
This guide provides a companion and resource for NEDs in search of good practice. It is the first step in the delivery of a more dynamic, web-portal product in the future.