If you're not the direct target, you might have a desire to defend whoever was the intended target. But if you're looking for a way to handle the situation tactfully, you'll need to calm down first.
[header] How to tactfully handle a racist boss [title] Stay calm. [step] Becoming visibly upset as a result of your boss's racist words or behaviors will usually make the situation worse. If you're the target of the racist remark, you might feel like lashing back.