Four key takeaways:

  • Tesla sales are plummeting around the world and its share price is down by 45% from its peak.
  • A recent study found that 50% of board directors believe that boards should have the right to take action against a CEO who makes a public statement that harms the company.
  • However, another study found that only 23% of boards currently oversee their organization’s crisis management processes.
  • According to FTI Consulting, ““When a crisis strikes, the board is there for support but also to challenge senior executives to ensure they are acting in the interest of stakeholders.”

I have been thinking a good deal about the role of boards in risk and crisis management in recent weeks, in large part because of what is going on at Tesla, where sales have—as this headline suggests—fallen off a cliff.

And it’s not just sales: the company’s reputation is in steep decline too, as consumers around the world react to Elon Musk’s attacks on US government services and his support for far-right political parties around the world.

All of which has led to questions about the role of the board, which—it could be argued—has a fiduciary responsibility to rein in the CEO, whose activities have led to Tesla stock price losing 45% of its value.

What has the board been doing in response to this crisis? Well, board chair Robyn Denholm has liquidated roughly $117 million in stock in total over the past three months. Beyond that… crickets, as this New York Times analysis points out.

So with the Tesla board missing in action, I was already wondering about the role of boards in situations such as this one, where the interests of the CEO and the interests of the company and its shareholders diverge so dramatically. And then I came across some research from FTI Consulting that addresses the issue (albeit, without mentioning Tesla at all).

First, there’s a study produced by FTI in partnership with Corporate Board Member and Diligent Institute based on a survey directors of publicly traded companies, which found them thinking quite a lot about risk. For example, 85% of directors believe there is a greater risk of losing customers by taking a stance on an issue rather than refraining.

More than 60% of board directors agreed that “corporate officers represent the company even in their private dealings and should always check with the board/ leadership team before making public statements that carry a potential risk for the company.” And 50% agreed that “the board/company should have the right to take action against a CxO, including the CEO, who makes a public statement that harms the company.”

And yet, a recent Economist Impact survey of 600 primary legal decision-makers sponsored by FTI Consulting shows only 23% of boards currently oversee their organization’s crisis management processes.

According to FTI: “In today’s unpredictable and high-stakes environment, it is crucial for boards to take an active role in crisis planning and preparation—not just to support senior leadership but to ensure the organisation is proactive, agile and resilient.

“When a crisis strikes, the board is there for support but also to challenge senior executives to ensure they are acting in the interest of stakeholders.”

There is little sign of that at Tesla, where it does not appear as if anyone is representing the interests of stakeholders.

Original image by Revel8er made available under  the Creative Commons CC0 1.0 Universal Public Domain Dedication.

Editor's note: In the *checks watch" five hours since I posted this story, Tesla's stock price has declined even further and the company has now lost more than half it value.