Board Role in the Covid-19 Pandemic

The economic fallout from the COVID-19 pandemic has been profound. The most recent studies produced by the Institute forSocial and Economic Research (ISER)at the University of Essex suggest that more than half of the jobs in different sectors of the UK economy are at risk Travel and tourism industry has been identified as the most affected industry by COVID-19 pandemic. As soon as the WHO have declared it a pandemic, the countries around the world have started closing borders and inducing transport limitations. Moreover, people themselves are avoiding travel unless necessary. Therefore, the leisure industry has been negatively impacted as summer resorts went through lockdowns and closures. Global airlines could lose no less than $113 billion in sales if the virus continues to spread at its current pace, according to the International Transport Association. Companies in this industry are now under significant stress, and need to make plans to address the issue. Ultimately, their ability to continue as a going concern may be in doubt.

Realizing the economic downturn that experienced by companies during this pandemic, board members are expected to significantly play their roles over the next 6 to 18 months in responding and recovering from the crisis. Boards have a critical role to play in directing and overseeing the organizations that they serve and, while maintaining appropriate separation from management, should support executive leadership and share the burden. Boards should also acknowledge that there is no off-the-shelf playbook for the current situation, and that they must be flexible and pragmatic in how they govern their organizations. In addition, the board's role when a company is facing significant liquidity issues is incredibly important. There are many decisions that need to be made and plenty of opportunity for others to be critical. Understanding the nuances of the financial accounting definition of a going concern is something the board needs to get their arms around. In the near term, the company might narrowly miss the requirement to have to make disclosures that there is substantial doubt about the company's ability to continue as a going concern. But that narrow miss might also be a sign that the company will be facing a more challenging going concern discussion in a few months or even a bankruptcy or restructuring down the road should economic conditions continue to worsen.

Furthermore, cyber-attacks are increasing amid the pandemic. COVID-19 led many companies to enable employees to work from home to ensure business continuity. But this change created greater data security vulnerabilities. IT functions that are already stretched thin are having to re-assess their cybersecurity posture and re-prioritize resources to respond quickly to the current environment.

(Excerpt from the Market Watch News Apr, 21, 2020).

REQUIRED:

1.Justify SIX (6) roles of the board in the COVID-19 crisis management.

(12 Marks)

2.Explain SIX (6) important questions should be asked by the board when the company's ability to continue as a going concern may be in doubt.

(12 Marks)

3.Suggest FOUR (4) significant matters should be concerned by the board in cyber-attacks issue.

(12 Marks)

4.If there is a conflict between shareholders and customers' interest, whose interest should be given a priority in this period of crisis management? Give your opinion as a board member of the company.

(2 Marks)

5.Discuss how corporate governance mechanisms below should play their roles in strengthening corporate governance practice in the period of COVID-19 pandemic:

(i)Shareholders;

(ii)Government;

(iii)Customer; and

(iv)Risk Management Committee

(12 Marks)