Mr. Manoj Sonawala is a renowned corporate leader and also an Independent Director, Company Secretary as well as an Associate Member of the Corporate Governance Institute (London). Mr. Sonwala has qualifications in Law as well as Commerce and has completed certification in Financial Reporting & Corporate Governance from IIM (Ahmedabad). Mr. Sonawala has over 30 years of experience in corporate governance, corporate law, ESG strategies, compliance, sustainability, and BRSR (Business Responsibility and Sustainability Reporting). In addition to long and extensive key positions in the past at the Tata Group and the Forbes Group, Mr. Sonawala is also the founder of Manoyog GRC Advisors, a multifaceted advisory firm focused on risk assessment, evaluation, ethics, CSR, business responsibility and ESG reporting, and is a Non-Executive Independent Director at Garware Hi-Tech Films Limited.
In this interaction, Mr. Sonawala shares his insightful thoughts on the role of independent directors in crisis management.
How has the role of independent directors evolved in managing crises, particularly with the increasing complexity of the business environment?
I believe independent directors have always played a crucial role in corporate governance, ensuring accountability, transparency and ethical decision-making. However, as business environments become more complex and crises emerge more frequently, the role has evolved beyond traditional oversight to include active crisis management as well as strategic leadership.
Today, independent directors are not only responsible for risk mitigation but also for steering boards through crises with sound decision-making while focusing on long-term value creation. Many notable cases highlight how independent directors have proactively guided organizations, safeguarding shareholder interests while ensuring regulatory compliance.
To fulfill this expanded role effectively, independent directors must engage in continuous monitoring of governance structures, implement strong risk management frameworks as well as participate in periodic board performance assessments. A well-prepared board, equipped with robust internal systems and clear crisis response strategies, can cohesively navigate unexpected challenges with greater agility.
What are the key challenges independent directors face in leading boards through crises, and how can technology help mitigate these challenges?
One of the primary challenges independent directors faces during crises is balancing short-term crisis resolution with long-term strategic planning. In many instances, immediate actions may be necessary to mitigate risks, but such measures could have unintended consequences on the company’s long-term sustainability. Thus, independent directors must ensure that crisis management efforts are not only effective in the short run but also aligned with the company’s broader vision as well as stakeholder expectations.
Another challenge is ensuring accountable decision-making across multiple stakeholders and with transparency. Crises often amplify communication gaps, hinder real-time information sharing in addition to creating governance inefficiencies. Technology plays a pivotal role in overcoming these challenges. With an advanced board management software solution, enable independent directors can enhance communication by using digital platforms to facilitate seamless, real-time collaboration among board members, executive management as well as key stakeholders.
Directors can also track decision-making through automated documentation of board actions. The overall risk assessment can also be improved using AI-driven analytics which can help identify emerging risks as well as evaluate crisis response effectiveness. Finally, a streamlined governance processes can be put in place using digital tools to ease board evaluations, regulatory compliance monitoring in addition to performance tracking.
How do independent directors ensure accountability within the governance system during crises?
Accountability becomes even more critical during crises, as organizations must maintain stakeholder trust while making difficult decisions under pressure. Independent directors play a key role in ensuring that the board’s decision-making remains transparent, ethically sound and aligned with the company’s long-term objectives. To enforce accountability, independent directors must focus on fostering a culture of transparency by ensuring that board discussions, decisions and actions are well-documented and accessible.
Directors can also help in clarifying roles and responsibilities by clearly defining individual and collective responsibilities within the board to ensure that every member is aware of their obligations. Further, directors can improve regular performance assessments through individual and overall board effectiveness to identify governance gaps and areas for improvement.
Also, ensuring compliance and shareholder protection can be done by upholding regulatory obligations and acting in the best interests of shareholders even when crisis pressures mount. Routine governance assessments allow independent directors to measure performance, analyze board dynamics and ensure that accountability remains a cornerstone of decision-making, especially in moments of uncertainty.
How can boards evaluate their crisis readiness, and what role does ongoing assessment play in this process?
A board’s ability to effectively respond to crises is largely determined by its preparedness, strategic foresight and ability to adapt to rapidly changing circumstances. To evaluate crisis readiness, boards should adopt a structured approach that includes regular risk assessments through identifying potential threats across operational, financial, regulatory and reputational dimensions. The board performance evaluations can include reviewing how well the board collaborates, makes decisions and responds under stress, if any.
Holistically, scenario planning and crisis simulations can be done by conducting crisis response drills to test the board’s agility in handling real-time challenges. Also, stakeholder engagement reviews can be done through assessment of board communicates with key stakeholders, including investors, employees, and regulators during crises. Also, using technology-driven governance reviews, digital tools can be utilized to enhance monitoring, reporting and response mechanisms.
I strongly believe that ongoing evaluation ensures that crisis management strategies remain relevant and adaptive to emerging risks. With use of board evaluation technologies, organizations can conduct thorough assessments more efficiently, track key governance metrics and enhance crisis preparedness in a data-driven manner.
Final Thoughts:
As business complexities and crisis situations continue to evolve, independent directors must take a proactive approach to governance, risk management, and crisis leadership. I believe that by leveraging technology, fostering transparency, and conducting regular performance evaluations, they can strengthen board dynamics and ensure organizations remain resilient, even in the face of any uncertainty.
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