Knowledge and Insights

The Role of the Board During Crisis

Whether it’s a cyber-attack, an executive’s misconduct or the health and economic crisis resulting from COVID-19, the Board of Directors plays an important role in helping its organization navigate and survive the challenges ahead.  In response to the COVID-19 pandemic, certain government-mandated restrictions and limitations have triggered sudden and profound economic impacts that have forced organizations to adapt and evolve in unprecedented ways.  Although most of the crisis management activities fall on the shoulders of executives, the board of directors should be involved in deliberations since many decisions to be made concern the very survival of the organizations they serve.

In addition to addressing employee health concerns amid the COVID-19 pandemic, business continuity should be a primary focus, which requires that organizations: (1) implement protocols to safeguard their employees and assets; (2) determine to what extent services can continue; and (3) identify business opportunities and risk mitigation strategies associated with operating in times of uncertainty.

Boards faced with the possibility of extended organizational interruption should consider the following action items:

  • Read insurance policies to determine the scope of coverage, including potential claims for business interruption losses, workers’ compensation, employment practices, etc.
    • Contact insurance attorneys, agents and brokers as necessary.
  • Review loan obligations and determine whether lenders are offering deferred payments and interest only arrangements given the current environment.
  • Review lease agreements to assess whether leases provide for rent deferrals under certain circumstances.
  • Contact your accountant to share your organization’s financial situation and discuss whether certain obligations should be delayed or restructured.
  • Contact your financial auditor to discuss any impacts to your audited financial statements, if applicable.
  • Contact critical vendors/suppliers and key customers to discuss how to protect the organization’s supply chain, when and under what terms to extend customer credit and related matters.
    • Suggest that management consider flattening payment arrangements and pursuing budgeted level payments.
  • Review the organizational handbook to determine whether employment policies have addressed work from home scenarios, business interruption, technology needs, etc.
  • If necessary, engage a human resources consultant to create action plans to address sick leave (including laws specific to your state), layoffs, union employee rights, etc.
  • Understand HIPAA compliance and other privacy concerns in releasing information related to positive COVID-19 cases at your office or location.
  • Contact your public relations and marketing consultants to understand the information you must convey to clients, customers, employees, donors, the media and others in times of crisis and develop comprehensive communication plans on a go-forward basis.
  • Assess whether the organization has proper cybersecurity protocols in place, so data is protected.
    • Beware of cyber scams via email, apps and other platforms. New app scams have emerged, which have been created to track the spread of COVID-19 to insert malware that compromises devices and personal information. There are also phishing scams to be aware of, so do not click any unfamiliar links in emails or texts.
  • Pay attention to new legislation being passed to aid your organization and employees. Relief is being made available in a variety of measures.

Business owners and community leaders as well as regulatory agencies and governmental authorities expect boards to be proactive, assess risks and act responsibly to protect the organizations’ reputation during a crisis.  With that in mind, boards should focus their time and talent on making organizations future-ready by approving initiatives to sustain operations during shut-down periods and planning for the new-normal once the crisis subsides.

High-functioning boards tend to have a mix of experience, a passion for the organization’s mission, a demonstrated commitment to service and strong vision and leadership qualities.  Emotional and economic distress of the COVID-19 magnitude requires active participation by the entire board including supporting executives and evaluating their effectiveness in overcoming the obstacles during crisis.  In making decisions, the board should also consider any public or private expectations the organization may have set pre-crisis as well as its promises in connection with being a good corporate citizen.

During these difficult times, Mercadien’s team of experts are available if and when you need us. Do not hesitate to reach out to me via email at or phone at 609-689-2319 with any concerns or questions you may have.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice, and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.