Pike River Royal Commission Findings Show Failure of Board

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Pike River Royal Commission Findings Show Failure of Board Governance Skills

Despite the many failings exposed in the Pike River Royal Commission’s report, there is no escaping the fact that it was the Board of Pike River who failed in their ultimate responsibility, Geraint Bermingham, chair of the NZ Society for risk management said today. They failed in all respects to understand and oversee the risks the company was subject to, and not only destroyed the company but carry significant responsibility for the death of 29 workers at the mine.

It is time that Boards were expected to understand and properly govern risk he continued. It is a serious failing that Boards are only expected to carry financial responsibility Bermingham stated. He says that not only is it is essential that organisations such as the Institute of Directors recognise that accepted wisdom in this respect is grossly out of date, but it is time that regulation of boards caught up with 21st century expectations.

Training of boards and the educational material available to them must catch up with social expectations and at the very least include best practice risk management. There is also a clear need for at least some on the board to be competent in operational subject matter of their organisation, whether that is mining, forestry or any other business.

The fact that, even after the tragedy, the chair of the Pike River Board’s safety and environment committee stated to the Royal Commission that he was comfortable with reporting despite gas readings exceeded 5% (the lower flammable limit for methane) on a number of occasions shows a truly staggering inability to recognise critical risks.

It is time that expectations of Boards to both understand risks and govern their organisations to manage them were brought up to standards befitting a first world country.

ENDS

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