If there is one overarching lesson businesses can take from recent global events, it is arguably that disruption is here to stay and uncertainty may well be the new normal.
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Demands on boards continue to remain high as geopolitical instability, global economic uncertainty, evolving stakeholder expectations and the accelerated pace of technological advances continue to impact business operations and strategies with increasing frequency and in a highly interconnected way. Against this backdrop, my conversations with chairs and board members across various industries, regions and sectors, lead me to believe that there is a fundamental shift in the nature and focus of governance globally, as boards adapt to navigating a complex and uncertain external environment.
In addition, there is increasing concern that other strategically important priorities and boardroom topics, such as organizational purpose, culture, talent strategies and climate, could slip down – or even off – the agenda given the urgency to address many of the pressing global events and trends.
So, how can chairs and their boards balance their near- and long-term priorities to govern effectively in this environment? By concentrating on having the right capabilities and diversity, alongside the appropriate agenda, governance structures and balance of short- and long-term focus, boards can help protect their organizations from risk and be a true value-driver by providing the executive team with support and challenge in equal measure.
Governance considerations in the face of global external factors
The prevalence of these major external factors and evolving political environments can each impact businesses across a range of aspects, such as energy security, supply chain disruption, workforce safety and escalating costs.
Many boards are approaching these challenges by revisiting the oversight and support they provide to management, in particular regarding their focus on scenario planning to consider longer-term impacts, analysis of those impacts across each aspect of the organization and resulting actions.
These are complex considerations that require time, effort and skill and are activities vital to assessing and protecting the resilience and success of a business – a core role of the board.
Navigating rapid technological advancement
Many board members and chairs acknowledge that the fast pace of the technology revolution – in particular, the impact of Generative AI (GenAI) and, equally, the threats posed by cyber-attacks – are likely to have a transformative impact on work and business in the coming months and years.
The debates regarding the ethical implications of emerging technology, as well as trustworthy tech, are also intensifying – boards and executives are still learning the key considerations at play.
Boards and management should play a role in evaluating the wider impact of emerging tech on business strategy, operating models (including workforce strategies), resilience and investments. They should examine whether the right skills and capabilities are present in the boardroom to help empower better decision-making and risk management and help steer their organizations through dynamic business landscapes.
Using frameworks, such as those developed by the Deloitte AI Institute, to assist organizations in developing ethical safeguards can help boards and executives focus their approach to managing the risks and capitalizing on the returns associated with disruptive technologies, such as AI.
This article was originally published on The World Economic Forum’s Agenda Blog.
