Rethinking Risk And Control For The Modern FMCG Enterprise
Debbie Morrison • March 2, 2023

Despite risk management dominating many board agendas, Australian companies have repeatedly proven unprepared for recent shocks such as the COVID-19 pandemic, supply chain disruptions, labour shortages, the Great Resignation and cybersecurity events.


A 2021 EY survey of more than 500 global board members revealed that risk management today typically lacks focus on emerging and atypical risks, is not always aligned with business strategy and is too entrenched in the here and now. 


The result? Disruptions to supply chains lost revenue and reputational damage as a result of cyber-attacks have become commonplace for Australian companies. More than half of respondents said they had experienced one or more of these risks in their last three years of operation.


The same EY survey found that boards are failing to focus on strategic issues such as transformation planning because they are too bogged down in the minutiae of financial reporting and traditional risk and compliance: 43% of board members spend the most time on financial reporting, but only 18% think this is important.


With greater regulatory enforcement of board requirements around fiduciary duties, balancing the necessary risk and compliance tasks with a focus on emerging risks, and challenges of tomorrow is becoming increasingly burdensome for boards.


Risk management is under pressure to evolve as a result of a shifting landscape and changing stakeholder expectations – it’s time for boards to rethink their appetite and approach to risk.


How can boards free themselves to focus on the big picture?



Revamp board composition

One way that boards can gain greater perspective on emerging risks is to review their current skills gaps and objectively ask themselves whether the current board composition is adequately equipped to cope with future and atypical risks.


While we are not advocating a radical overhaul of the board immediately, we see value in boards seeking out a broader range of perspectives by engaging with external subject matter experts, considering broader talent pools from different industries and less conventional backgrounds in addition to regularly engaging in programs such as reverse mentoring.

By developing a diverse pipeline of leaders for succession planning purposes, boards can expand their horizons when it comes to thinking strategically about emerging risks.


Boards should consider new directors who:

•    Understand emerging risks

•    Have expertise in complex technology platforms used by the organisation

•    Know the issues and best practices in the company’s industry or parallel industries

•    Make the board more diverse

•    Have a good understanding of digital transformations and the underlying value proposition

•    Can communicate the strengths, weaknesses, opportunities, and threats posed by management's proposed strategic approaches and tactical implementation plans



Promote greater diversity at board level

In spite of the almost daily debate about diversity in the global media, it seems boards are not convinced that evaluating board composition and augmenting skill sets would improve risk management oversight.


Only 30% of boards believe this would be effective, according to a survey from Ernst & Young. And only 6% of C-suite executives anticipate significant changes in leadership within the next 12 months, according to their
Capital Confidence Barometer.


64%
of boards say their organisations can effectively manage traditional risks including changes in regulation, drops in demand and increased borrowing costs. 


Yet only
39% say their organisations can effectively manage atypical and emerging risks--such as threats associated with new technology, cybersecurity, the impact of climate emergencies--or internal risks.


This disconnect suggests that boards continue to remain stifled by short-term thinking and the priorities associated with traditional risks. Increasingly, it is critical to consider a longer time horizon when assessing strategy and risk – ideally more than five years – especially where emerging and atypical risks are concerned.


In today’s rapidly evolving business environment, ‘Big Picture’ thinking not only in terms of risk management but also in board composition is an essential element of effectively navigating future risks.


The biggest risk for organisations is not taking risks. In order to echo the customers, employees, stakeholders and communities they serve, boards must design their current and future composition to include a diverse perspective in the boardroom. Without this diversity, boards are unlikely to be as effective and therefore competitive going forward.


For example,
Research shows that female representation on boards can be linked to better financial performance and better climate governance and innovation. By adding greater diversity to board compositions, boards can enhance the technical skillsets that are relevant to their unique operating environment and onboard individuals with greater soft skills such as collaboration, creativity and constructive challenge to unlock untapped thinking.



Leverage Technology


Boards should also look beyond their composition and structure to focus on how they can free themselves for more focused and strategic discussions that will lead to better decision-making.


One way boards can achieve this is by limiting the time spent on routine and administrative tasks. Technology – and artificial intelligence in particular – can be very helpful in reading, reviewing and validating financial reporting. 


Equally, analysing large volumes of data over time using artificial intelligence can quickly establish trends and patterns that would have taken years to uncover due to the scope and speed of improvements that AI brings.


For example, The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry found that banks had failed to put customers first. A culture that puts customers first is critical for long-term success in a competitive market.


Directors need to ensure that their organisations are competitive and ethical in their use of data. Large-scale data and AI usage is frequently the differentiator between thriving companies, which use these technologies to understand their customers and those that are failing to meet industry standards or not competing effectively.


However, fewer than
one in five boards say their organisation is highly effective at leveraging data and technology or delivering timely, insight-driven reporting to the board. 


What boards can do:

  1. Put customer data on the agenda: Formally discuss how your company uses data, analytics and AI to win in a world where these technologies are growing in importance.
  2. Assess skill levels and cultural barriers to data-driven decision-making: Which skills are needed?
  3. Benchmark how you use customer data: How does your organisation stack up with competitors when it comes to leveraging data and artificial intelligence to mitigate risk?
  4. Seek expertise: Take advice on Data use and how this relatively new and complex tool can be used to help expedite better decision-making and risk management.


Naturally, boards must ensure that any data or
AI strategy is embedded in their enterprise strategy. And that means ensuring that there is robust governance over the ethical use of AI, so that it doesn't lead to unintentional bias and discrimination in order to build trust in AI and mitigate reputational risk.

Creating a culture and operating environment where customer signals can be identified, analysed and integrated into automated decision-making processes is the governance challenge of our times. Boards that are good at learning this will see exponential returns.



Embed purpose in governance and strategy

While there are significant threats today, the opportunities for strategic success are even greater. Technology disruption and sizeable shifts in customer expectations present significant risks for organisations but at the same stroke offer strategic opportunities for boards.

Stakeholders expect companies to drive societal impact, environmental sustainability, and inclusive growth. And 78% of respondents believe that a focus on sustainable and inclusive growth has been critical to building trust with stakeholders in today's uncertain times.


In today's rapidly changing business environment, organisations need to be able to adapt at a moment's notice. In order to do so, they must have a clear sense of their purpose and how it aligns with their strategy. This can help board members guide their companies through disruptive times and seize transformational opportunities.


One way to align your organisation's culture with its purpose is to consider compensation plans that reward board members, executives, and employees based on their progress in delivering long-term value to stakeholders in line with the business's purpose-led strategy. This can help build a culture that is more deeply aligned with organisational purpose


Questions for boards to consider:

  1. Have you developed an active dialog with executive management about the role of artificial intelligence in reviewing and validating data to uncover insights into enterprise risks and opportunities?
  2. Are you aware of the mechanisms and processes in place to ensure diversity is a key consideration or design principle when appointing new board members?
  3. Do you have confidence that the purpose of your organisation, its board and individual directors is clear, understood and put into practice?



At ELR Executive we have over 20 years experience, ensuring we identify the right leadership talent for our clients boardrooms. If you'd like to learn more about how we can help you hire the right leadership talent, who can navigate your business forward, securing its competitive advantage to thrive in new markets, speak to us today.


A Farmer walking through a barn, using a laptop with cows eating hay nearby.
By John Elliott April 17, 2025
Australia’s meat sector is facing a leadership vacuum. Explore the hidden crisis behind staffing, succession, and ESG risk in food manufacturing.
By John Elliott April 6, 2025
Comfort has become the silent killer of executive performance. In an era defined by disruption, volatility, and shrinking margins, too many leadership teams are still optimising for control, not adaptability. They talk about transformation, but build cultures of stability. They prize clarity, yet avoid the ambiguity where real growth lives. The problem isn’t capability. It’s discomfort intolerance. The solution? Start hiring and promoting leaders who deliberately seek discomfort—not just those who can tolerate it when it arrives. Growth Mindset Isn’t Enough Anymore You’ve heard the term "growth mindset" countless times. It’s become a leadership cliché. But it’s not wrong—it’s just incomplete. A growth mindset says, "I believe I can learn." Discomfort-driven leadership says, "I will actively seek out the hardest experiences because that’s where I’ll grow fastest." The distinction matters. Leaders with a growth mindset tend to thrive when external change forces them to adapt. But leaders who embrace discomfort create those conditions on purpose. They invite hard feedback. They question their own success. They take action before external pressure arrives. According to a 2023 study by Deloitte, only 22% of executives say their leadership team is “very prepared” for the future—despite record spending on transformation programmes (Deloitte Human Capital Trends, 2023). That gap exists because most teams are trained to manage change , not lead into uncertainty . Ask yourself: Are you hiring leaders who wait for disruption—or ones who walk towards it? Discomfort Is the Driver of Strategic Advantage Companies don’t fall behind because they make bad decisions. They fall behind because their leaders avoid the hard ones. In high-stakes industries like FMCG, where regulatory pressure, margin compression, and shifting consumer loyalty are accelerating, comfort is dangerous. It fosters: Short-termism Decision paralysis Lack of innovation Cultural stagnation McKinsey found that organisations with a strong tolerance for ambiguity—where leaders frequently challenge their own assumptions—are 2.4x more likely to be top-quartile performers on total shareholder returns (McKinsey & Company, 2022). In other words: embracing discomfort isn’t a trait—it’s a multiplier. Let’s take an example. When COVID hit, Lion Brewery—one of Australia's largest beer producers—was forced to rethink logistics and supply overnight. But smaller craft breweries who had already diversified through direct-to-consumer models adapted faster. Why? Their founders had already been operating in discomfort. They were trained for volatility. What Discomfort-Driven Leaders Actually Do Differently You can spot these leaders. They don’t always look like the most confident in the room—but they’re always the most effective in a storm. They: Seek feedback from critics, not fans Prioritise strategy over popularity Tackle underperformance head-on—even if it means conflict Ask hard questions that slow down groupthink Regularly step out of their functional lane to challenge assumptions They also act . Not rashly—but decisively. In a recent Australian Institute of Company Directors (AICD) survey, directors ranked “resilience and adaptability” as the #1 trait they now seek in new appointments—outranking experience for the first time (AICD, 2024). That’s not a trend. It’s a shift in what leadership now demands. The Real Cost of Hiring for Comfort Not hiring discomfort-driven leaders isn’t just a missed opportunity—it’s a risk. Here’s what it’s costing you: Strategic Drift: Without challenge, strategies become stale. Your team optimises yesterday’s model. Talent Exodus: Top performers disengage when they see leadership avoiding tough calls. Innovation Bottlenecks: Safe cultures don’t take smart risks. New ideas die in committee. Crisis Fragility: Leaders who haven’t been tested won’t perform when stakes are high. Bain & Company found that companies with decision-making cultures built around speed and tension—not consensus—were 95% more likely to deliver sustained value creation (Bain, 2023). Ask yourself: Is your executive team equipped for bold calls—or just built for calm waters? How to Identify Discomfort-Driven Leaders in Interviews Everyone talks a good game in interviews. But few have the scar tissue that comes from operating in real discomfort. The trick is to go beyond surface-level success stories. Here’s how: Ask Better Questions: “What’s the most uncomfortable decision you’ve made in the last 12 months—and how did it play out?” “Tell me about a time you got strong pushback from your team. What did you do?” “What’s a belief you held strongly that you’ve now abandoned?” “When have you chosen a path that was harder in the short term, but better long term?” Look for: Specificity (vagueness = theory, not lived experience) Self-awareness without self-promotion Signs of humility: they talk about learning, not just winning Evidence of risk-taking: role changes, cross-functional moves, or failed experiments Pro tip: Ask referees how the leader handles ambiguity. Not just performance. This will tell you more about how they lead under pressure. What to Do Now: Practical Actions for Executive Teams If you want to build a leadership culture of discomfort, you have to engineer it. It won’t happen organically in high-performing, risk-averse teams. Here’s how to start: Audit Your Current Team: When was the last time each leader took on something that scared them? Rethink Talent Criteria: Shift from stability and experience to adaptability and action under pressure. Redesign Development: Stretch your execs with ambiguous, cross-functional challenges—not just workshops. Model It at the Top: If the CEO isn’t embracing discomfort, no one else will. You don’t need to create chaos. You just need to stop insulating your leaders from discomfort—and start asking them to seek it. The Discomfort Dividend You can’t build a future-ready business with comfort-first leadership. The next generation of strategic advantage will come not from better processes or faster tech—but from bolder human decisions. From leaders who are willing to feel awkward, wrong, or out of their depth—because they know that’s where the value is. So next time you're hiring a leader, ask yourself: Are they looking for clarity—or ready to lead without it? Do they want the role—or are they ready for the risk that comes with it? Are they seeking comfort—or prepared to create discomfort for progress? Because in 2025, comfort is a luxury your business can’t afford .