As we look behind us at 2016, we experienced some significant changes (Brexit, the U.S. election) as well as a growing number of multi-billion-dollar M&A deals, evolving regulations and proposed governance standards, and ongoing cyber security attacks that threaten deals such as the $4.8 billion Yahoo-Verizon merger. Directors and officers and board members need to not only guide their companies through these changes but also take the steps needed to ensure greater accountability for brand reputation and issues management as 2017 unfolds.
A recent article in Private Company Director magazine outlines the top trends set to make the greatest impact on boards in 2017. Following is an overview of these trends:
- Greater Focus on Individual Accountability: Collective financial performance among board members is not the only measurement that will matter. Board members will be measured by their personal effectiveness, diligence, ethical quotient (EQ) and contribution to the corporate brand. Members will need to assess the security of their confidential digital communications (both personal and professional), and implement best practices designed to protect the integrity of sensitive information, and ultimately, the company’s reputation.
- The Need for Board Diversity: Boards will look to add more women and minorities as directors along with including individuals with technology and security skill setsto keep up with today’s more diverse and global views as well as our fast-paced, tech-driven business environment.
- Improved Collaboration: Board members will be looking for more transparency, authority and the ability to advise and make key decisions in partnership with company decision makers. As the level of accountability grows, the line between the board and executive management will be redistributed. This new redistribution will also guide how the board interacts with activist investors, shareholders and each other.
- Cyber Security and Board: Cyber security is one of the biggest risks, if not the biggest risk, facing companies today. Company boards that haven’t done so yet will be adding individuals with CIO/CISO experience to help them address the risks they face. They will also be looking to enhance public-private partnerships and work with third-party providers to address their security culture, pinpoint where data is located and any potential vulnerabilities and how regulations will impact the company.
- Political Changes and the Boardroom: How the new political climate and administration will affect domestic practices, corporate governance and foreign policy is something board members will need to keep a close eye on. Talk of dismantling Dodd-Frank, immigration policy changes, and the potential repeal of the Affordable Care Act, among other issues are all front-and-center topics for a company’s board.
2017 is set to be one filled with change. Board members, directors and officers and executive management need to be prepared by keeping abreast of how these changes may impact their enterprises and by adhering to industry best practices. Additionally, reviewing a company’s directors & officers (D&O) liability insurance program is key in helping to ensure that the firm, its executives and board members are properly protected in the event of a lawsuit. RPS specializes in D&O insurance and is available to assist in securing a program that fits a client’s risk profile.
Source: Private Company Director Magazine