Senior executives: risk and the board of directors in the age of planetary boundaries

In a context of profound transformation across economic, ecological, geopolitical and societal environments, the responsibility of senior executives towards their board of directors has never been more critical. The nature of the risks companies face is evolving rapidly, in terms of frequency, intensity and interconnections. Today, continuing to analyse risks as simple, linear chains of cause and effect, independent from one another, is no longer sufficient to guide strategic decision-making.

We have disrupted a system that was once relatively stable, and we are now entering an era of extreme volatility, where rare events become frequent, the unexpected becomes the norm, and impacts spread far beyond the traditional boundaries of organisations. Moreover, the past, even the recent past, is no longer a reliable basis for anticipating future developments.

Risk management has changed in nature. It now requires a systemic perspective and an anticipatory capacity that many boards have not yet fully developed. Understanding how a board perceives, or fails to perceive, these systemic risks is becoming decisive in steering the company in a world where every decision matters and where blindness comes at a high cost.

To engage the board of directors effectively, it is essential to understand its internal dynamics and to clarify its role and responsibilities.

1. The board of directors: an independent arbitration body, yet fundamentally dependent on the information you provide

A board of directors is the ultimate body responsible for overseeing the company’s risks and opportunities. It is worth recalling that a board asks questions and makes decisions based on the information it receives, most often from the company itself. To establish and maintain a foundation of trust, it is crucial to understand how a board operates and what it needs.

You are therefore the gateway to the board’s understanding of the changes affecting the company. Your responsibility is not limited to reporting indicators or following procedures. It lies in translating a complex risk landscape into a clear, structured and decision-oriented narrative for the board.

2. Why traditional risk analysis no longer works

We have disrupted a system that was once in balance. Today, we do not know when extreme events will occur, which ones will happen, how frequently, or what risks they will trigger. As a result, the past is no longer a reliable foundation for identifying future risks.

We have opened a Pandora’s box of potentially catastrophic events: new, unprecedented and difficult to quantify.

Risks are interconnected, indirect and complex. They emerge from multiple, often unexpected sources (legal, physical, reputational and financial) and reinforce one another. Together, they form what we at Earth on Board call a constellation of disruption.

Furthermore, a risk approach can no longer be limited to the company’s immediate perimeter. It must now include the surrounding ecosystem in order to assess the level of risk faced by all stakeholders.

This is why, at Earth on Board, we encourage companies to go beyond the simple identification and mitigation of direct risks. The real priority is to focus on what truly matters, on what we genuinely want to protect.

Traditional risk coverage mechanisms, including insurance, which is gradually withdrawing from the most hazardous risk zones, are no longer sufficient.

3. Senior executives: clarifying what must be protected as a priority within the company

In this context, the role of executive teams is not merely to identify risks. It is to enable the board of directors to make the right trade-offs between risks and opportunities and, above all, to clarify what within the company deserves to be protected as a priority.

At Earth on Board, we categorise issues into three main groups:

• existential issues, affecting the company’s purpose and its social licence to operate;

• operational issues, broadened to include the stakeholder ecosystem;

• financial issues, impacting the company’s financial statements.

It is precisely on these issues that your responsibility takes on a strategic and decisive dimension. Informing the board directly conditions its ability to anticipate and to decide.