Seymour Burchman and Blair Jones are Managing Directors at Semler Brossy Consulting Group, LLC. This post is based on their Semler Brossy memorandum.
Corporate boards have a fiduciary responsibility to manage risk, especially against major events that could overwhelm an organization and devastate shareholders’ investments. The Covid-19 pandemic has forced new attention on board’s responsibilities.
It’s tempting to call this pandemic a black swan, a calamity so unexpected that companies could not have prepared for it. But experts have been predicting global pandemics for years, and in January 2020, the World Economic Forum’s Global Risks Report cited infectious diseases as a potential threat. And few companies included a global pandemic in their high risk categories.
Indeed, it’s better to see the pandemic as a “black elephant”—a term derived from a cross between a black swan and the “elephant in the room.” Coined by the investor and environmentalist Adam Sweidan, it describes a looming disaster that’s clearly visible, yet no one wants to address it.