How should corporate boards be responding to Covid-19?

Apr 14th '20

Recently, Corporate Compliance Insights published a paper by PWC, exploring the steps corporate boards should be taking in light of the coronavirus pandemic.


The document originated from the US, so not all the actions are relevant elsewhere. But many are appropriate regardless of the country you operate in. Here, we share the actions that apply to boards irrespective of location.


What areas should boards be considering?

As the Covid-19 pandemic continues, the business landscape has become unrecognisable. Firms are facing a range of diverse challenges – from supply chain to employee wellbeing issues – and need to respond accordingly.


What should be on your radar?


Employee wellbeing

The PWC paper suggests that boards should consider this ‘first and foremost’. Workforce safety is key, and boards need to identify and execute strategies to enable remote working, if they haven’t already. Where remote working isn’t possible, compliance with social distancing rules must be achieved.


Communications around wellbeing need to be honest and authentic, and delivered promptly.


Impact on strategy

Risk and strategy oversight are board-level responsibilities. You therefore need frequent updates from management – and to be communicating often with them – on the operational and strategic impact Covid-19 is having. There may need to be swift decisions on changes in strategic direction, as well as more tactical changes needed to respond to supply chain issues, workforce planning challenges and any efforts to save costs.


Transactions, opportunism and activism vulnerability

As the paper says, ‘if your company is currently in the midst of a transaction, access to information for diligence and pricing will be challenging. But while the deals market is uncertain, there will continue to be a very robust activism landscape’.


Your board needs to consider how it will respond to potential actions by hedge fund activists to take a stake in companies that have lost value. If this is something your firm would welcome, the paper says that ‘the board should consider the risks associated with uncertain outcomes and potential diligence barriers’.


Share repurchases and dividends

The global equity markets are in turmoil. Any current share repurchase programmes should be revisited – while not necessarily wrong for all companies, the paper points out that ‘the timing of share repurchases is always challenging and directors will want to carefully think through these decisions considering company-specific facts and circumstances’.


The company’s dividend policy is also something boards may want to scrutinise, given the current challenging economic environment and potential liquidity concerns.


Supply chain

Supply chain disruption continues, with some companies seeing excess supply or capacity and others facing shortages. The inability for these to resolve in the short term may mean that boards have to account for disrupted supply chains for some time to come.


The board’s role here can be important; they should ensure that supplier relationships are being actively managed. Any extraordinary supply chain expenses should be carefully documented.


Longer-term, are there lessons to learn from short-term disruption? Can the supply chain be improved for future, and in particular can business continuity plans be strengthened? Many firms were unprepared for the Covid-19 pandemic, as reported in this blog. Boards play a key role in ensuring this would not happen in future.



Future cash flows will be a key consideration for boards at this time. Revenues may well be in decline as a result of the pandemic. Firms may see reduced cash flow, delayed collection of money owed, and a need to pay money due faster to support key suppliers.



The paper makes the point that, ‘As companies work through their crisis management plans, the response should be in line with, and consider, the company’s values’.


Staying in line with your core values is vital. All relevant stakeholders should be considered, and receive frequent and proactive communication. Your crisis team should be small, nimble and cross-functional. Workstreams should have clearly defined ownership, roles and responsibilities.


With some corporate reporting rules relaxed, boards should stay abreast of their evolving obligations.


Conducting meetings safely

The paper says that ‘companies should be prepared to conduct board and committee meetings by telephone or video conference’. Doing this is obviously easier if your directors are already used to using online and virtual tools to access board and corporate information, using a board portal, for instance.


Succession planning

If any of your senior directors becomes ill, do you have a succession plan to continue in their absence? The paper says that ‘Boards must…be prepared to implement emergency temporary replacement plans should C-suite leaders become ill. Boards should also clarify their plans regarding emergency board leadership temporary replacements, with particular emphasis on the roles of board chair, lead director and committee chairs’.


Tone at the top and business conduct

The paper notes that ‘Additional problems tend to arise in a storm’. The board plays a key role in ensuring that the corporate culture remains on track, particularly if internal reporting structures are compromised by illness or absence. The integrity of any whistleblower systems should be checked, so that any material issues continue to be brought to the board in a timely way.


Be prepared to respond to unexpected events

It’s an over-used word currently, but the impact of the Covid-19 pandemic is unprecedented. However, many of the steps boards should be taking to respond are plans that should have been in place as potential responses to other disaster situations.


As a result, directors hopefully have some sort of structure to their response, and a business continuity plan that can – at least in part – address the issues faced.


Operating remotely will be a central tenet of this continuity plan. As mentioned above, directors who have taken steps to digitalise the boardroom will be ahead of the pack.


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