One counterintuitive fact for boards of companies facing a crisis: Not only does the board need to help, it also needs to consider if they are the right people to help.

This is one of the many insights from Henrich Greve, Professor of Entrepreneurship and the Rudolf and Valeria Maag Chaired Professor in Entrepreneurship at INSEAD, in the latest INSEAD Explains Governance video.

Organisations are susceptible to geopolitical tensions, regulatory changes, technological disruptions such as artificial intelligence and other forms of upheavals. In such a landscape, the board has a role to play – though not always in the most intuitive ways.  

In addition to scanning the wider environment for potential threats, the board needs to nudge the management team to look inwards and prepare the organisation for overcoming crises. It’s essentially about developing its ability to coordinate among parties that detect potential for harm, those with the information to handle the crisis and those with the expertise to analyse this information, and ensure that information flows to the executive level – the core of crisis response. 

Being prepared boils down to having the right processes, assigning roles and rehearsing. How well the firm is prepared determines whether the board is involved in more of a correcting and upward path or whether the board has to… do damage control and recovery.

While setting objectives is a central role of boards, objectives during a crisis may differ from peace-time objectives. Hence the role of the board is to adapt the objectives to the situation and ensure that these objectives are communicated to the management team. After all, making quality decisions in times of crisis requires the right information, the right timing, and alignment with the right objectives. 

Invariably, the management team always has the advantage of time and information over the board. That’s why it is important, says Greve, to trust: the board needs to trust the executive team to manage the crisis as long as the board has provided them with the right objectives.