“But there is no reason for board members to get things so disastrously wrong,” he said. “The purpose of this publication is to help them achieve robust risk oversight, whether their role is executive or non-executive, their organisation large or small, UK-based or multinational, and regardless of industry sector.”

In the introduction to the guide, Simon Walker, Director General of the IoD said that a key lesson to emerge from the Roads to Ruin report is that boards are a crucial mechanism through which risks should be identified and managed.

“Without a competent board, manageable difficulties are more likely to escalate out of control. There is a greater chance that the organisation will experience major losses, damage to its reputation, or disappear altogether,” he said.

Recent experiences during the financial crisis have shown that risk management is a core responsibility for boards’ of directors or supervisory boards, said Mr Walker. “Risk management cannot simply be delegated to specialist risk managers or even the CEO. It is simply too important. Moreover, many aspects of risk management require a strategic perspective that is beyond the remit of the typical risk management department,” he said.

A common problem, and a potentially fatal flaw, is a ‘glass ceiling’ that hinders communication between internal monitoring departments–such as risk management–and the board, according to the guide.

Controlled risk-taking lies at the heart of all commercial activity. However, boards can fail to manage risk for a variety of reasons, according to Sir John, Chairman of Anglo-American, who wrote a foreword to the guide.

“Many corporate disasters occur due to the weakness of the board itself. The board has the potential to be both a source of risk to the organisation as well as an effective means of risk mitigation,” he said.

It is all too easy for directors to discount the significance of boardroom pitfalls when it comes to risk, said Sir Parker. But history has shown that issues can easily arise on boards, even among directors of high caliber, he said.

The guide is designed to ensure that ‘your organisation does not become the next case study in the annals of poor risk management,’ said Sir John. “This publication seeks to help shape the risk management agenda of board members. In particular, it will assist chairmen and non-executive directors to hit the ground running in their risk management role, and rapidly ask the right questions of the CEO and the rest of the management team,” he said.

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