• What are the board’s duties?
• How should management keep the board informed?
• What are the critical topics and best practices for crisis management?

The board of directors is responsible for oversight of the company’s risk assessment and management in connection with the COVID-19 crisis. As with any other risk area, the board must stay informed and engage in a dialogue with management to help identify issues and provide strategic direction. Directors should seek an appropriate balance in light of the situation, giving management the right amount of space to triage issues, make decisions and provide needed leadership while remaining agile to take a more active role as needed. The board may want to designate the Audit Committee or another committee with crisis management authority that can assemble more quickly to address developments if existing committee charters don’t make that authority clear.

If it hasn’t already, management should consider forming a task force and adhere to key procedures for risk identification, assessment and tracking; internal communications; and timely communication of any public or companywide disclosure. This may involve designating point persons for handling employment and health questions; managing event, contract or service cancellations; and reviewing expenditures if prudent to limit those to critical items to preserve liquidity. Internal and external communications should also be properly vetted to ensure information is accurate and not overly optimistic or pessimistic and, in the case of publicly traded companies, complies with Regulation FD.

Topics that management should consider and discuss with the board include:

• Identification of specific risks and contingency planning, such as:
  • Who are the key participants in the business (e.g., suppliers, customers and employees).
  • What functions are essential to support continued operations.
  • What aspects are at risk due to illness, closures, spending cuts, travel restrictions, market volatility and liquidity constraints.
  • What alternative arrangements are available and whether they pose new risks.
  • What initiatives should be stalled and what costs can/should be eliminated.
• Emergency succession plans for the board, executive team and other key persons.
• Employee health and safety.
• Updated forecasts, with a variety of scenarios.
• Staffing cuts and benefits available.
• Assessment of and response to emergency legislation.
• Availability of liquidity (such as precautionary draws on revolving loans), covenant compliance and communication with lenders.
• Continued capacity to pay dividends.
• Loss mitigation plans and applicability of force majeure clauses.
• Legal exposure (contracts, employees, D&O claims, securities claims).
• Availability of insurance coverage.
• Cybersecurity and data privacy risk (such as that from quickly shifting to remote work, having reduced staff/resources or incurring coronavirus-related phishing attacks).
• Maintaining accurate public company disclosures and Regulation FD compliance.
• Company stock repurchases and insider trading compliance.
• Annual meeting logistics, including the possibility of a virtual meeting.
• If/when/how to adjust performance-based compensation targets.
• Shareholder activism due to stock price decline.

To avoid unnecessarily burdening management with board communication process while management is dealing with the crisis in real time, most companies will need to prioritize the topics addressed with the board.