Effective Boards
Board effectiveness can be broken down into two themes:
- Having a robust approach to risk management, which not only considers the potential existing and emerging threats, but also considers positive risks which can result in boards meeting their objectives faster; and
- Making the most of valuable meeting time; both in how you structure the meeting itself and how boards equip themselves to make effective decisions.
At Aon, we have the right people and right tools to help you with these.
Having structures around risk management and ensuring that your meeting time is effective gives you the best chance of achieving your objectives without being distracted by activities that do not support your goals or being thrown off-course by unexpected events.
1. Risk Management Plans
The risks associated with running schemes are complex and the outcomes are significantly impacted by how well those involved manage these risks. In addition to more traditional risks like longevity, covenant and investment volatility, we are also facing risks associated with the increase in complexity of member options, the inevitable risk of missed opportunities in a market where pricing is transient as well as new and emerging risks.
It has never been more important to have in place robust risk management plans to actively manage the broad range of risks that pension schemes face.
Aon's Risks Management Framework (link) ensures that all aspects of risk are considered, from the documentation of the scheme's risk management statement, risk registers, controls dashboard and incident response plans, to advice on new and emerging risks such as cyber threats and climate change.
We have a wealth of experience in advising organisations on cyber risk and have a team dedicated to assisting pension schemes with understanding and managing cyber risks. Further details for pension schemes is available here (link) and for organisations here (link). For more information on climate change see here.
2. Managing Meetings and Robust Decision Making
Over the last few years, Aon has partnered with Behave London, a behavioural insight company, to get a better understanding of both individual and group decision making. Our Better Boards document (link) sets out the outcome of our research and led to the development of a suite of tools to (a) enhance your understanding of your current operational effectiveness and governance and (b) take tangible steps towards improvement, including improving trustee meetings and decision making.
Humans possess a ‘planning fallacy’ which means we have the tendency to underestimate how much time will be needed to complete tasks. The key here is to plan for life to be unpredictable. Aon's Trustee Meeting Framework has long-term strategy built into it, so that you can help your board meet the important challenge of planning for the scheme’s future.
The Trustee Toolkit provides a behaviourally-designed framework for running trustee meetings, and crucially, how to plan for the time between meetings. By addressing the spaces between meetings, we can make the meetings themselves as effective as possible.
Each step of the agenda has been designed using a combination of behavioural research, and canvassing the opinions of over 120 trustees in what they feel to be the most important items to cover in the increasingly short time that trustees have to execute. We also tested on 300 members of the general public so that we could see how trustees were different in how they made decisions.
We focused our attention in a number of areas:
- How to restructure meetings to ensure that they focus on the strategic decisions and enabling actions to progress between meetings.
- Consideration of behavioural biases and alternative approaches to assist with enhancing decision making, including a chair's checklist and tips to challenge the advice received.
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These tools can be downloaded for free:
Where do I find out more?
If you would like more information on any of these topics, please contact one of the Governance Team below, or your usual Aon contact.
Susan Hoare, FIA – Partner
Aon
+44 (0)117 900 4441
+44 (0)7971 550 219
[email protected]
Susan leads Aon's specialist governance team and is responsible for ensuring Aon's latest thinking on governance and trustee effectiveness remains market leading. Her work includes development of the managing meetings framework including consideration of the behavioural biases that impact on group decision-making, and the development of tools to help overcome these. She is currently sitting on one of the Pensions Regulator's industry panels on Diversity and Inclusion.
Sue Austen, AIA – Associate Partner
+44 (0)113 394 3413
+44 (0)7976 194517
[email protected]
Sue leads Aon's secretariat, pensions management and secondment services. Sue joined Aon in 1996 and since that time has worked with a range of clients facing many and varied challenges, and provided support to trustees in identifying and setting out a robust plan to meet their strategic objectives.
Vanessa Jaeger, FIA – Associate Partner
+44 (0)1727 888 230
+44 (0)7944 277611
[email protected]
Vanessa is an Associate Partner and Actuary at Aon, with over 20 years’ experience. In her governance roles, Vanessa co-lead the creation and delivery of Aon’s cyber security offering for pension schemes and has played an integral role in the development of Aon's Better Boards research in collaboration with Behave London and trustee effectiveness tools as a result of this research. She has also supported the development of our skills and diversity assessment.
Vanessa is currently a member of the Institute and Faculty of Actuaries Cyber Risk Management Working Party.
To learn more, or to speak to one of our experts, call 0800 279 5588 or email [email protected]
Aon Solutions UK Limited is authorised and regulated by the Financial Conduct Authority.