Taking Charge of Asymmetric Information Risk
I interviewed Martin Coyne, board member at Akamai and RockTech about the tension between directors and management on company information directors require to provide effective oversight and advice. Obviously, there is an imbalance with management knowing more about the company. How can boards overcome this information imbalance -- known as "asymmetric information risk"? Below are his suggestions:
1. Define your board-level expectations of management. Examples include strategy and operations. Then communicate to management how much to discuss in each area, including how much time on the agenda to dedicate for each area.
2. Identify what the board wants to track and specify reporting metrics. What gets measured gets done.
3. Have strong chair or lead director leadership. This role needs to make sure information provided to the board is relevant and needs to draw out each director’s viewpoint, reactions, and questions to ensure everyone participates.
Tracy E. Houston, M.A. president of Board Resource Services, is a board advisory consultant and executive coach headquartered in the Denver area. She conducts board evaluations and assists boards with a variety of issues that increase effectiveness. She can be reached at firstname.lastname@example.org or http://www.eboardmember.com
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