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ACCA Strategic Professional · Strategic Business Leader · The board of directors

Borealis Energy's board spends most meetings reviewing monthly operational reports and approving routine purchases. Strategy, risk appetite and succession are discussed for ten minutes a year. A new non-executive director says the board is not discharging its core role. Which responsibility is the board primarily neglecting?

The board is neglecting its core responsibility of setting strategic direction and overseeing risk, succession and management performance. Time spent on routine operational matters crowds out these duties, which governance frameworks assign to the board rather than to management.

  1. ASetting strategic direction and overseeing risk and management performanceCorrect
  2. BPreparing the detailed departmental budgets for each manager
  3. CCarrying out the external audit of the annual financial statements
  4. DNegotiating day-to-day supplier contracts on behalf of management

Explanation

The board's core role is to set strategy, determine risk appetite, appoint and oversee senior management and be accountable to shareholders. Operational detail belongs to management. The other options are management or auditor tasks, not board duties.

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