Facing an economic downturn, organizations need escape hatches, says Dotty Hayes, a board member in Silicon Valley and former CAE.
How do boards evaluate the risk and potential inpact of recession-and how can internat audit help?
I do my own environmental scanning such as staying current with news sources and updates from professional organizations. I also look for management’s viewpoint on the economy and risks to the business, specifically. In budgeting or forecasting discussions, I expect a dialogue on the range of potential outcomes and am attuned to the risk attitude taken by management. Are they barreling ahead without regard to what is happening in the world? Are they afraid of the dark? Neither extreme is good. In particular, I look for ways in which business plans provide optionality — the quality of being chosen but not obligatory — and escape hatches to increase resilience in the face of uncertainty.