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Lawrence A. Bennigson, Ph.D.

Opportunity and Risk Management: The Dual Roles of the Board in Growing Value

Corporations are awash in cash. The Wall Street Journal reported cash and short-term investments on corporate balance sheets globally are at an all-time high of $6.84 trillion, according to data from S&P Global. That is 45% higher than the average in the five years preceding the COVID pandemic and a 2.6% increase from the previous quarter. Why are companies holding so much cash? And – more importantly - what can boards do to increase new value creation by companies?


One would think the top priority for companies would be finding investment opportunities that create value—and that management and boards would be focusing on this together. Yet in many discussions about growth, the role of boards seems to be limited to agreeing to modest growth targets. Why does the business community give short shrift to the board’s responsibility and effectiveness in overseeing the creation of value? We believe business has lowered its expectations about what boards can and should do, expecting boards to act more as watchdogs and stewards of existing value than as overseers of the creation of new value.



Even though most boards take growth seriously, in practice their responsibilities have evolved to the point where risk management and risk-based thinking dominate agendas, and board members devote most of their time and energy to risk issues. Moreover, there is a well-developed risk-management industry to support boards in risk oversight. One recent estimate of the size of this industry is about $35B and growing more than 13% a year.


The imbalance between board risk and opportunity oversight is a serious problem. From my decades of consulting experience, I know that a preoccupation with risk and neglect of opportunity can have a dampening effect on a company’s long-term competitiveness and growth. An imbalance at the board level sets in motion unexpected and unwanted consequences, cascading and amplifying down through the organization, that become a brake on growth, resulting in de facto opportunity aversion.


So, what can boards do?


There are several things boards can do to improve how they oversee opportunity generation, beginning with conducting an honest appraisal of what’s currently in place.


In my experience, to oversee value creation, boards need to

  1. Recognize the imbalance between risk and opportunity oversight

  2. Conduct an honest appraisal of the company’s opportunity-generating capability, and

  3. Cultivate an active partnership between the board and senior leadership in the search for opportunity

A company’s opportunity-generating capability is how it searches for, recognizes, creates, and pursues value-creating opportunities. Although it’s common for boards to pay attention to individual opportunities as they arise, they too rarely take an active role in either promoting broader opportunity discovery or assessing and assuring the company has high-quality opportunity-generating capabilities.


Ensuring the development of the company’s opportunity-generating capability should be an integral part of the board’s role in value creation. Two questions the board should ask are: “Is the enterprise capable of realizing the opportunities its strategy depends on?” and “Is the enterprise capable of adapting the strategy to important emerging opportunities?”



In the board’s capacity as opportunity overseer, it should have a well-informed point of view about:

  • the company’s overall approach to recognizing and pursuing opportunities

  • the current state of the enterprise’s opportunity-generating capability

  • how that capability aligns with the enterprise’s strategic challenges

  • top management’s action plan for enhancing that capability.

Here are a handful of practical suggestions on how to begin:

  • At the next board meeting, include a discussion of opportunity oversight and develop some possible next steps.

  • Encourage two or three directors to volunteer to work with the CEO on an opportunity-focused working group.

  • Ask management to provide an annual overview of the company’s “opportunity-generating processes,” with continuous improvement plans.

  • Create an Opportunity Oversight Committee of the board to parallel the work of the Audit Committee or Risk Committee.

  • Encourage the board’s Governance Committee to review the board “gene pool” to ensure that it has sufficient experience and qualifications to question and assess the enterprise’s opportunity processes.

The protection of value is, and will always be, an important responsibility of the board. But even world-class risk oversight cannot build an enterprise’s future. The creation of value is equally important. Boards should seriously address this question: “What could world-class opportunity oversight look like for our company?” The enterprise’s ability to create the future is too important not to be addressed head-on at the board level.


Larry Bennigson is a partner at Sage Partners, a strategy and governance consulting firm, and has served on corporate boards in roles including Lead Director and Chair and taught at Harvard Business School and other universities. Frank S. Leonard was a Sage Partners fellow and independent strategy consultant for thirty years and taught at Harvard Business School. This article draws on Bennigson and Leonard’s previously published MITSloan Management Review article.

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