Survey Gives Insider Look at Thoughts from Public Company Directors

September 26, 2011 (PLANSPONSOR.com) - According to a new survey by the Corporate Governance Practice of BDO USA, LLP, most corporate directors at public companies understand that they need to do more to identify and manage risk in their organizations.  

The survey, titled 2011 BDO Board Survey, found board members also have definitive opinions on the implementation of two major components of the 2010 Dodd-Frank Act and its impact on their responsibilities, Business Insurance reports. Despite a great deal of criticism when the SEC announced its new whistleblower bounties, most directors do not believe the bounties will undermine their existing internal compliance programs, but they are very concerned
with the likelihood of an increase in false allegations due to the SEC bounties. After experiencing the first proxy season under the Dodd-Frank “Say-on-Pay” disclosure rules, a strong majority of board members don’t believe the rules help them in managing executive compensation.

These are just a few of the findings in the survey, which examines the opinions of more than 100 corporate directors of public company boards regarding financial reporting and corporate governance issues. The national telephone survey was conducted in August 2011. Executive interviewers spoke directly to 101 board members for public companies with revenues ranging from $250 million to $750 million.

The ongoing economic difficulties resulting from the financial crisis appears to have driven home the need for boards to manage risk more effectively. When asked what topics they would like to spend more time on, a majority (55%) of board members at public companies cite risk management, more than any other area. Moreover, an even greater percentage (61%) believe their liability risk as a director has increased during the past few years.

These concerns may be well-founded as more than one-half (53%) of the directors indicate their companies do not have a Chief Risk Officer (CRO), or a person with similar responsibilities, and two-thirds (67%) say their boards do not have a risk committee, Business Insurance said.

Of the 47% of businesses that have Chief Risk Officers in place, most report directly to either the CEO (42%) or CFO (38%). By comparison, it is relatively rare to have them report to the Board (9%), General Counsel (4%) or Chief Operating Officer (4%).