Any organization seeking to navigate the turbulent waters of the current COVID-19 pandemic needs the steady guidance of an engaged board of directors to review and question management’s plans and make decisions in the organization’s long-term best interests. In addition to a checklist for directors that Osler has prepared regarding the board’s role in overseeing the COVID-19 crisis, we set out below examples of questions that directors can ask to help them assess management’s response to the crisis.
1. Focus on health and safety
- Can we do more to enable more of our employees to work remotely from home?
- What more can be done to ensure the safety of our employees at work?
- How can we best protect the safety of our suppliers and customers?
2. Stay informed
- What key operating measures can management report on to the board to provide insight into the impact of the pandemic on the organization?
- Are there external expert resources that directors can access to stay informed?
3. Assess and reassess financial resources
- Can we increase our borrowings?
- What can we do now to conserve cash?
- Is the corporation current on its payroll obligations and have all remittances for corporate withholdings to date been made?
- How long can we continue under current conditions, and what if conditions get materially worse?
4. Review crisis response plans
- Who are the key individuals under our crisis response plan, what are their respective responsibilities and what back-up support exists?
- What assumptions underly management’s current plans for managing the crisis and what factors would cause management to change its plans?
- What changes have been made under the crisis response plan since our last meeting and why?
5. Oversee and assess management’s assessment of risks and its plans to manage them
- How well do we understand the financial position of our key suppliers and their underlying sources of supply?
- Have we explored alternative sources of supply for any imported materials?
- What additional steps are being taken to ensure employees remain sensitive to cyberattacks while working remotely?
- How comfortable are we in the security and confidentiality of our proprietary information being accessed or stored remotely, including through employee personal devices?
- Are there additional measures which can be taken to protect our core IT systems?
- Are we likely to face a prohibition on operations in any of the jurisdictions in which our offices are located, and what can we do if that happens?
- Should we be taking steps now to reduce employee compensation during the COVID-19 crisis? What assurance should we provide to employees about their compensation arrangements to address their concerns?
- Are we able to maintain an equivalent level of internal controls in the current environment, and what do we intend to disclose about changes in our internal control over financial reporting?
- Do we have any gaps in our available talent if one or more of our senior executive team members is incapacitated?
- What changes are being considered to our business continuity plans, and why?
6. Assess management’s communications strategy
- How are we maintaining ongoing communications with our employees?
- Have we withdrawn our earnings guidance for the year and if not, why not?
- What have we communicated to our customers, suppliers and other stakeholders about the impact of the pandemic on our operations and our response?
7. Oversee management’s handling of the crisis
- Is management keeping the board informed of key decisions being made during the crisis?
8. Help safeguard the organization’s values and culture
- Do the decisions made by management appropriately reflect our values?
- How is management ensuring that the organization’s culture is being maintained during the crisis?
9. Consider opportunities
- Can we change our operations to support the collective health effort?
- Are there any businesses that lack our capital resources and that we would wish to acquire?
- Is there a new opportunity to partner or merge with another business now?
10. Assess the risk of opportunistic behaviour
- Has there been significant turnover among investors and what impact might that have on how shareholders might view the organization and its strategy?
- Are additional protections from opportunistic behaviour necessary or appropriate at this time, including shareholder rights plans and/or advance notice provisions relating to the nomination of directors?
11. Keep a long-term focus
- What are the key relationships we need to maintain in order to emerge from the current crisis?
- Is management appropriately considering the organization’s long-term interests and reputation in its communications and actions?
12. Engage in a 'lessons learned' exercise once the dust settles
- What did we do well, and what can we do better next time?