Keeping cool amid crisis with Guy Cowen FAICD

Guy Cowan FAICD shares three of the most important board lessons he has learned.

Guy Cowan is chair of Queensland Sugar, Port of Brisbane, Stahmann Webster Group and AFF Cotton. He credits his 23-year career in the challenging oil and gas sector as contributing to his ability to keep his cool in troublesome times.

“I suppose I generally remain calm under stress. I was with Shell for 23 years, spending three years in Nigeria, where I had to handle some unpleasant situations. We were pushing back on potential corruption and there was a looming legal case by the government to eject Shell from the country. We faced physical threats and two of my staff were assassinated.”

He says when a company is facing an existential threat, there is no alternative but to tough it out. “If you think a director’s job is just coming to board meetings, making a few clever comments and moving off — that’s not it. For me, a director’s job means getting fully involved. If you don’t have that attitude, you shouldn’t be a director.”

1. Avoid a concentration of risk

This company had a property division and an engineering division. We were in the process of selling the property division when two large contracts came to us for approval. The demerger was a significant transaction — and a big distraction.

As a board, we failed to fully appreciate the two contracts were ultimately linked to the same client, leading to excessive risk concentration.

We assumed, because we weren’t the prime contractor on one contract, that our exposure to risk was reduced. We approved both of them, but ultimately, the prime contractor failed to deliver on their obligations and we had to take over.

We ended up exposed on two different contracts to the same client, who incurred significant delays. The contracts were fixed-price, which meant delays were costly on our side. We had to revise project estimates and go back to the ASX several times with profit updates.

This led to a lack of confidence in board and management, and the share price fell significantly. Then we had a hostile takeover, which was ultimately successful.

I learned that all board members should be aware of the risks involved in fixed-price contracts and ensure exposure to a single client is not excessive. Be sure to ask the right questions and check on the background of the co-contractors and clients. It was a harsh lesson.

2. When faced with a difficult situation, dig deep and stay firm

The sugar industry was deregulated in 2000, making it possible for anybody to enter the market and for sugar mills to do their own marketing. QSL had to compete for market share, having lost its single-desk status.

Wilmar International bought CSR in 2010 and decided to market its own sugar. The growers resisted this and legislation was enacted to allow them to market with whoever they chose. Wilmar was unhappy it was required to compete and that many growers had elected to market with QSL.

There had been a cyclone in North Queensland just before Wilmar took over CSR, and a third of the crop couldn’t be harvested. Despite the risk mitigants QSL had in place, many mills reduced their forecasts too late to prevent the crop being oversold and sales contracts cancelled. As sugar is forward sold, QSL had to reverse some hedges, leading to material costs. These costs were passed back to the mills, which passed a portion back to the growers.

Wilmar took legal action against QSL for their share of the losses. If we lost, we would possibly have had to declare voluntary administration. But we won. Our risk management approach was vindicated and we emerged stronger. We had built up direct relationships with the growers and introduced pricing and technical innovations. Had board and management not held firm and focused on innovation, there could have been a different outcome.

3. As a chair, invest in your relationship with the CEO

I currently chair four companies, and at each of them I have established a strong relationship with the CEO. On one of my boards, shortly after I took over as chair, there was a long-standing CEO who I tried to establish a relationship with. It was clear relations between the CEO and the board had broken down well before I joined. A number of corporate psychologists were brought in to try to resolve the issue. Ultimately, I felt [the situation] was irretrievable and we regretfully agreed to move the CEO on and pick another one.

I’ve been working closely with the new CEO to ensure we don’t get a repeat situation. I’m a bridge between board members and the CEO. I make sure there’s no miscommunication and the CEO is clear on his responsibilities.

I’ve encouraged him to make direct contact with board members and communicate frequently. The relationship has gone extremely well.

A chair can be an effective mentor to the CEO — a guiding hand, confidant and somebody who can help them to build a relationship with the board.

You’ve got to communicate, build trust and let them know you’re there to help, not to penalise them. If they’re getting criticism from the board, ensure you interpret that in a positive way for them. On all my boards, I make sure I have one-on-ones with the CEO — either once a week or fortnightly.

This article first appeared under the headline '3x3' in the October 2025 issue of Company Director magazine.