Boards of the future will need to be learning boards that are highly adaptive and agile to steer their companies through uncertain times that are increasingly dominated by fast changing geo-political change, business models impacted by a tsunami new technologies.
Increased diversity and inclusion in the boardroom will continue to be a key trend markets across the globe, but needs to happen faster
The Hampton-Alexander targets 33% of women to be on the boards and leadership teams of FTSE 100 companies by 2020. Ireland has 31% female representation on Board, as per a study conducted by EY Ireland.
Female representation in the boardroom has been an area of focus across the globe, be it with regulators, institutional investors or governments. While increasing female representation in the boardroom is critical, diversity is more than gender. Boards should start looking at the broader side of diversity – diversity of skills and thinking to advance the company’s objective in uncertain times.
Cyber risk will be an increasing area of risk for organisations as data becomes the new oil
Boards need to understand the importance of cyber risk as an important oversight role. Directors need to keep themselves informed of the growing cyber security issues which can affect the entire organisation in the complex evolving world of technology and data.
New business models driven by new technologies need to be front and centre on the boardroom agenda to ensure business viability
Boards will need to understand the use of evolving technologies such as Artificial Intelligence, Machine Learning, Data Analytics and Blockchain for the greater good of business. The board’s knowledge in these areas will help them guide the management to consider the use of the new technologies in their business strategy. New technologies can also be leveraged by the boards to assess risk and develop a prudent risk management framework.
Climate change and sustainability are under the governance microscope like never before
Boards should include sustainability and climate change as an important item on boardroom agendas and their business strategies. Several institutional investors like the Norwegian Sovereign Wealth Fund, BlackRock, Vanguard and Fidelity have changed their investment and voting policies in response to the changing public sector and private investor outlook in relation to this topic.
There needs to be a sea change in boards approach to Continuing Professional Development (CPD) to ensure directors know what they need to know
Continuing Professional Development (CPD) will be a key tool to improve overall board effectiveness. Topics could include: regulation and compliance, updates on governance, risk management, diversity and inclusion and sector specific updates.
Innovation is a top agenda item
Innovations should be a top agenda item in the boardrooms as it is often seen as a key metric to measure organisation’s success. Boards should have a collective view on innovation and directors should be able to understand and deliver on areas of innovation.
Company culture is a the glue that will make organisations more sustainable and attractive to work for
Culture is seen as a nebulous concept by many, yet it is arguably the most important factor to drive board effectiveness and overall company’s success. Board will have to create or support a culture that is aligned to the strategy of the organisation with a tone that is set from the top.
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David W Duffy FCA is the Founder and CEO of the Governance Company and the author of “A Practical Guide to Corporate Governance” published by Chartered Accountants Ireland.