While many companies still consider that the Board’s primary function should be to monitor the CEO and senior management, evidence from recent years shows that this is not a sufficient role to ensure its effectiveness. On the contrary, Boards that focus on this task are not going deep enough into the functions that should be a priority.

In reality, the expectations and responsibilities of Boards have increased in today’s world, so they are currently expected to be guardians of the interests, not only of shareholders, but also of the various interest groups (customers, collaborators, suppliers, financiers, among others) and to ensure that the decisions made generate sustainable value for the company.

In this sense, to the extent that Boards are an active governing body, their members must have a deep understanding of the company, its context and its complexities. Thus, Board leadership implies understanding that among the functions that must be considered critical are those related to defining the strategy and identifying and monitoring risks.

With respect to strategy, even though its implementation is the job of the CEO and the Senior Management team, the Board must work in a coordinated manner with management in order to understand, discuss and, finally, approve the strategy. On the other hand, in addition to defining the risk appetite, it is the Board’s obligation to foresee various scenarios, even the most unexpected ones, and to project into the future, in order to identify potential risks that may arise, anticipating the worst situations.

These responsibilities go beyond putting a formal seal of approval on strategic plans and risk management policy. In addition, a substantial element of this framework is positive collaboration between the Board and the senior management team. The Board must support and work with the CEO, and not simply remain in the task of monitoring the organization’s chief executive.