CIMA hosted a very interesting round table today on board effectiveness.  Chaired by the CIMA Professor of Accounting and Financial Management at the LSE, Wim A Van der Stede and led by Jonathan Hayward, Director of Independent Audit, there was a mixture of executive and non-executive directors with one company secretary, all from FTSE350 companies.

Our starting point was the current attention on corporate governance as evidenced by the current reviews underway by Sir David Walker and the FRC. We looked at two specific themes - structure and culture. So the structure element looks at formal approaches such as the possible establishment of a Risk Committee while the culture theme explores issues such as creating a climate of constructive challenge. Here's just a couple of points that emerged from the discussion.

Actually, one conclusion was that it can be hard to distinguish between structure and culture.  Good processes can drive behaviour and codification of best practice can set beneficial cultural change in motion. But as one participant explained very clearly from his own experience, genuine cultural and behavioural change does not happen overnight.  It can take years. 

On the other hand, though, you still have to be careful with processes as they can engender box-ticking, complacency and stultification. You might need to re-orient what is a good process to achieve a different objective.

When it comes to risk management, it was pointed out that boards behave differently in the heat of a crisis. Even if a stress test had looked OK on paper, it was another story when it was happening for real. And circumstances over the last year had been particularly unusual - few, if any directors had encountered anything like it before. The saving grace though is that they now bear the scars of battle and have earned valuable experience for the future. Another practical issue on the subject of stress testing was how can you do it without actually wrecking your business in the process?

Are you involved in governance - either as a NED or executive director or in some other way?  Do these conclusions fit with your experience?