Part I: Balancing offense and defense

Boards play a critical role in balancing growth and risk, with many struggling to achieve this equilibrium. FCLTGlobal research, supported by McKinsey & Company, notes that while companies often avoid risk, this can limit their ability to lead. Effective boards adopt a balance between “offence” (pursuing strategic opportunities) and “defence” (ensuring risk management and operational stability).

Boards across ownership structures vary. Widely held public company boards are typically risk-averse and supervisory. Closely held firms allow a stronger management focus and alignment with shareholder risk appetite. Private equity boards are transaction-driven with intermediate time horizons, while venture capital boards are highly involved, growth-oriented, and management-partnered.

Examples include Votorantim, which jointly defines its mandate with shareholders, ensuring clarity across strategy, risk, and incentives. State Street emphasises the need for boards to understand strategy, plan CEO succession, and oversee risk effectively.

Part II: Learning from best practices across geographies and markets

Strategic governance varies across geographies and ownership structures. Boards should align their time horizons with company investment cycles. Term lengths, director compensation, and ownership incentives must reflect this alignment. For example, long-term strategies in family-owned firms contrast with shorter-term focuses in buyout-stage companies.

Risk and growth practices are influenced by both intrinsic motivations (e.g., personal legacy) and extrinsic factors (e.g., equity incentives). Equity tends to drive growth orientation, while cash payments may support risk control. National norms also shape director incentives. In Sweden, large shareholders nominate directors, while in the US, they often do not. In Japan, workforce representation is absent, but high involvement and trust define board culture.

Smaller boards tend to engage closely with management and provide broader access to strategic information. Larger boards are more deliberative but may be less agile. These differences should guide governance model selection to fit the company’s context and strategy.

Part III: Toolkits: Practices to build your playbook

Questions for developing strategic governance
Boards should clarify their remit, including which authorities are delegated to management and whose interests directors represent. Independence from management and a shared understanding of the board’s role are essential for long-term value creation.

Self-assessment for individual directors
Directors should assess whether their perspectives—leadership, technical, or industry-related—match the board’s needs. A long-term mindset, including meaningful equity holdings and extended investment horizons (e.g., 5 years), helps sustain commitment and focus. Boards should include directors motivated by the company’s enduring success, not short-term personal gains.

Pro-tips for board chairs
Chairs should build trust among directors, management, and owners. Actions include in-person engagement, retreats, and ongoing dialogue with the CEO. Directors should be well-resourced, with streamlined materials, analyst support, and access to education.

Agendas should prioritise strategy and critical thinking. Tactics include “Vote, Talk, Vote” methods, crisis simulations, and scheduling strategy first. Committee meetings should be separate from full board discussions. Chairs should encourage board self-assessment and adapt agendas to evolving challenges.

Effective chairs foster independence, mitigate groupthink, and ensure board deliberations focus on long-term outcomes. Key skills of directors should be actively engaged in meetings, and evolving conditions should prompt regular reassessment of board assumptions and contributions.