Cybersecurity and AI present biggest oversight challenges with benchmarking data being a critical need in new survey of U.S. public company directors
Nearly two-thirds of U.S. public company board members want better intelligence, saying they could be more impactful in their oversight of cyber and other risks if they could proactively anticipate disruption, according to a new report released today by Diligent, a leading GRC SaaS company, BDO USA, one of the nation’s leading accounting and advisory firms, and Corporate Board Member, a market-leading publication for public company board members.
What Directors Think 2024: Governing in the Age of Disruption details findings from a survey of 250 U.S public company directors on what is top of mind for America’s boardrooms in 2024. Priorities topping the list include having the right leadership in place and growing the business. But governing has become increasingly complex due to competing needs to balance macroeconomics and emerging risks where control is not solely in the hands of the board, such as regulations, technological advancements and cybersecurity. Boards have also seen a continuously high number of activist campaigns worldwide according to Diligent Market Intelligence, though 41% of directors admit shareholder activism has created more awareness for the need for good governance.
“Risks and opportunities are evolving faster than ever, and with that comes a greater chance of boards missing an oversight or compliance obligation,” said Dottie Schindlinger, Executive Director of the Diligent Institute. “We’re hearing from boards that they continue to prioritize cybersecurity and AI and that they need better data and insights to help them see around corners to mitigate risks and take advantage of new opportunities.”
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Among the top findings three key themes emerged:
Directors struggle to oversee AI, but cybersecurity is more pressing on the board agenda
- AI and cybersecurity were identified as the most challenging areas for directors to oversee, at 36% and 35%, respectfully. However, when it comes to setting the board agenda, only cybersecurity made the list of top five issues most pressing to discuss.
- When it comes to the SEC’s cybersecurity disclosure rules, directors feel management is better prepared than the board. Respondents rated their boards’ preparedness a 6.75 out of 10 and management’s a 7.28 out of 10.
Directors want data and third-party expertise to help them in their oversight duties
- Half of board members say access to more KPIs and benchmarking data would help them improve their ability to oversee risk.
- The most sought-after skills in the boardroom remain C-Suite and industry expertise, as nearly half of directors say they can fill gaps elsewhere with third party subject matter experts.
Labor remains a concern for the second year in a row
- In the 2023 What Directors Think Survey, 64% of directors said talent had gained too much leverage in the labor market, and 39% said they expected the pendulum to swing back soon.
- However, this year’s results paint a different picture. 76% of directors said the labor market, including cost and availability of talent, negatively affected their company’s performance in 2023. Consequently, organizations are planning to make attracting and retaining talent a priority in 2024, taking a backseat only to revenue and profit growth on directors’ list of strategic priorities.
“The past few years have been marked by incessant disruption, and directors understand that this fast-paced environment isn’t going anywhere soon—if ever,” said Melanie Nolen, Corporate Board Member’s Research Editor, and the Head of Research for parent company Chief Executive Group. “And because a lot of these issues today are new, even for experienced directors, staying abreast of any development, in all of these areas, will be key to successful governance in the future.”
“As the board’s agenda grows, directors are expected to sharpen their skills in a variety of areas including strategies on cyber risk mitigation, talent development and seeking out timely and informative insights,” observes Amy Rojik, leader of BDO USA’s Center for Corporate Governance. “We urge directors reviewing this report to consider how each of the report questions and responses by their peers reflect the substantial challenges and opportunities that they face in their own boardrooms. To be a proactive and productive board, directors must first be informed.”
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