Home > Strategy > 20 Questions to be asked by directors about strategy, by the Canadian Institute of Chartered Accountants

20 Questions to be asked by directors about strategy, by the Canadian Institute of Chartered Accountants

The CICA published in 2012 a third version of their “20 Questions Directors Should Ask about Strategy”, that they first released in 2003. This is just one among different reports of the kind, their “20 Questions series”, which they provide to enhance the directors effectiveness and education.


Strategy is one of these areas where directors need to be more focused than ever in the XXI century, as many new factors have appeared, (many of them correctly named after the word “fast”: globalization, evolving regulation, technology dominance, etc,).


The 20 questions are structured under certain areas: (I) allocation of responsibilities, strategy design and implementation. We will briefly follow each of them.


As for the first area, Cica asserts directors need to be aware that there are two visions as to what the role of a board is, one in which the board dictates the strategy, (managers adding support), and a second one in which the main managers design strategy and directors validate it or not. In any case a director has a legal duty of care, so that he needs to understand the context, the strategy and associated risks. Both in a static and dynamic perspective, directors should consequently be able to influence the strategy and exposure to risk. So the questions would be:

  1. What is the board`s role in strategy?
  2. What is the process for developing the plan?
  3. How will the company help directors understand company and context (at least when they lack the industry expertise)?
  4. How will management and board engage to reach the final result?
  5. What`s the company risk appetite?
  6. What is the strategic context of every decision? Once the plan is approved, every decision the board makes needs to be done under the light of this plan….


As for the second area, (II) Strategy design and content, questions need to be made on:


  • Vision and goals: recommended questions would be:


  1. What is the future context for the industry and for the company? The future context should be depicted not only when risks to current picture are considered, but for itself.
  2. Where (in the market, in the value chain, or geography) will the company compete, and why, (capabilities, alternatives and risks)?
  3. What are the strategic and financial goals?


  • Corporate strategy: portfolio and M&A decisions are relevant, so certain questions need to be answered for a director to be satisfied:


10. Is any of the company`s industries to suffer restructuring process and why? Understanding the restructuring drivers helps unveil critical skills and positioning for success.

11. What role should the company play in the industry restructuring? How could it better position itself for that role?

12. How does the parent company add value? Just a capital allocator? A management skill pool and training center? Resource sharing enhancer when possible? Are competencies and risks adequate?

13. Is corporate strategy consistent with the parent company capabilities and role? Has the parent company got financial acumen if what is needed is an investor-like parent company?


  • Competitive strategy for each business, so that alternatives, choices and risks are understood. Questions could be the following:


14. Does the proposed strategy lead the company towards its goals? Does a new product, or acquisition fit with the goals?

15. How does a proposed strategy or course of action affect the current skill and resource requirement and the associated risks?


  • Functional strategies,


16. What functional strategies are critical for success?

17. How does the strategy consider social responsibility? Are CSR considerations embedded in strategy design and execution?


As for the third area, (III) Strategy implementation and special situations, questions need to be made on:


18. What are the steps, risks and expected returns of the strategy implementation? Understanding the scenarios, the risks associated, and the board role in every step (think of an investment that needs to have a board approval) is relevant for directors to assure success in implementation.

19. What strategic options are kept open or eliminated by decided courses of action? Directors need to be aware of the company`s remaining flexibility.

20. Is the board prepared for events (Ceo removal, merger, activist investor proposals, and so on) that could eventually take directors to the strategy front line?


All these questions are very well prepared and ready to be used. Big and public companies are normally complex and their structures are very capable to cope with the strategy challenges, but a board needs to fulfill its duties, and these questions need to be answered consciously or not if directors want to be sure that they are doing a good job!




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