The following is an excerpt from a conversation that took place at MLR Media’s The Private Company Governance Summit 2025.
SPEAKERS: Lynn Clarke, lead independent director and governance chair, The Vollrath Company; Martin Frech, chair, Biosphere Corporation; Bill Hayes, editor in chief, Private Company Director; Julia Klein, director, Eastern States Group, ConvergEd/Total Experience Learning; former director, Federal Reserve Bank of Philadelphia
HAYES: What are the most pressing risks facing private company boards today?
CLARKE: One major risk is a lack of trust — between board members, between the CEO and the board, and even between shareholders and the board or CEO. Without trust, you don’t have an effective board.
In family businesses, another big risk is unclear direction from shareholders. If they aren’t communicating what they want from their directors — what the mission is, what kind of culture they value — it’s hard for independent directors to succeed. Everyone wants to do a great job, but that becomes nearly impossible without guidance.
Boards also sometimes overlook key tools for effectiveness. Annual board evaluations, especially when done deeply, are essential. It’s not just about rating scales. It’s about digging into the comments or doing one-on-one interviews if needed. Individual peer evaluations matter too. Without them, you risk mediocrity.
Succession planning, both long-term and emergency planning, is another area where I see risk. And if your strategic plan isn’t a living, breathing document reviewed regularly, that’s also a vulnerability. At Vollrath, we revisit our strategy at every board meeting. Lastly, board composition matters a lot. You’ve got to be deliberate. Select for courage. Look to the future. Vet thoroughly. These aren’t just best practices. They’re risk mitigators.
HAYES: How do you think about board effectiveness in relation to risk?
FRECH: There are plenty of risks — cybersecurity, macroeconomic shifts, currency fluctuations — but none of it matters if the board itself isn’t effective. That’s the risk I think gets overlooked most.
Boards fall into two categories: intentional and non-intentional. Intentional boards know why they exist. Their members were chosen for specific reasons. They have a mission. Non-intentional boards just show up, listen to presentations, have dinner and move on. They tick boxes but don’t deliver value. Having a board that’s passive rather than purposeful is a huge risk.
Being clear with the board about what the company is aiming to do — grow, preserve, expand, pivot — is fundamental. That clarity of intention must be built. Without it, the board is just going through the motions, and that’s not good enough in today’s environment.
HAYES: How do you think about risk ownership and board engagement?
KLEIN: I’ve changed my thinking on that over the years. I used to say that if everyone owns risk, then no one owns risk, and I still think there’s truth in that. But I’m more focused now on how risk is addressed rather than just who owns it.
How is risk built into the board calendar? How do we hire people who can be great sounding boards and who have the imagination to see around corners? How do we train for agility and speed?
A few months ago, I was doing a tabletop exercise with a higher education board — an active shooter scenario. And while we were in the middle of it, a real fire broke out on campus. What mattered most in that moment wasn’t the plan; it was that people knew exactly who to call. That kind of preparedness, the practice of how to respond, is critical. It made me realize that practicing risk response and mitigation is just as important as assigning responsibility for it.
HAYES: What kind of board composition is needed to manage today’s risk landscape?
FRECH: The risk profile should shape the board. That’s not always a given, but it should be. Yes, you want hard skills — someone who has lived through a cyberattack or managed a major operational disruption. That functional expertise is important.
But beyond that, it’s about character. You want people who stay calm when they get hit in the face, so to speak. That’s when real leadership shows up. One of the biggest lessons I’ve learned, especially in existential-risk scenarios, is that pragmatism beats sophistication. I’ve seen companies with beautiful PowerPoints fall apart because they didn’t have actionable plans.
In one case, our servers were locked up in a ransomware attack. We didn’t need strategy slides. We needed a phone number. We had it. That made all the difference. If your plan is buried in a digital folder no one can access under stress, it’s useless. Boards need people who know how to get things done under pressure.
HAYES: How do you manage cascading risks and volatility?
KLEIN: I think we’re now in a world beyond VUCA. It’s super-duper VUCA. Things are volatile, uncertain, complex and ambiguous, but on steroids. You can’t plan for everything. That’s why it’s not just about skill sets anymore. It’s about hiring for imagination, temperament, agility and character. Those are hard to find and even harder to combine in one person.
Boards must learn together. I’ve found myself in meetings more and more saying, “Who’d have thought that?” Because things are constantly happening that none of us imagined. So how do we train our boards to respond creatively and constructively?
In a cascading risk world, the board’s role as a trusted advisor becomes even more vital. Governance and compliance are still crucial, of course, but the advisory function — the ability to be a sounding board — is more important than ever.
HAYES: What happens when crisis strikes unexpectedly, especially in the public eye?
CLARKE: One of the biggest risks today is the “inadvertent crisis” — something that explodes on social media, often divorced from reality. We’re all running our own media outlets now, whether we mean to or not, thanks to social platforms.
I recently joined the board of Just Born, the company that makes Peeps, Mike and Ike, and other candies. In 2023, California passed legislation banning Red Dye No. 3. Peeps became the poster child. It was a public relations nightmare and yet the company had already moved away from Red Dye No. 3. They anticipated the regulatory shift because they operate globally and had already adjusted to stricter standards elsewhere.
Still, once that narrative was out there, it was hard to control. PR firms were brought in, but the misinformation had already spread too far. So instead of fighting it, the company focused on communicating positively about what’s in the product. And it worked. We’re now getting credit for being early movers on cleaner ingredients.
The lesson? See around the corners. Be ready to respond. But also know when to stop defending and start redirecting. It’s about forward momentum.