The stakes have never been higher for professionals to manage critical issues like cyber risk, regulation, culture and ethics, as well as the constant pressure to drive business performance.
In 2018, Diligent Corporation commissioned a study by Forrester Consulting to evaluate the technology used for board governance. The picture it painted was decidedly mixed: boards are adopting specialised software, communication tools and online storage, but are not taking full advantage of the digital capabilities on offer. Key findings included:
- Personal email is being used for sensitive communications: More than half (56%) of board members use personal email to communicate about board matters. This practice is highly insecure and elevates the organisation’s risk of falling prey to cybercriminals.
- Boards aren’t using technology to generate insights: Few organisations have adopted the end-to-end governance technologies that would allow them to understand risk, view governance scorecards and gain insights into their organisation’s overall performance.
- Current technologies hinder rather than help in a crisis: Boards reported that their current board management software was at best no help and at worst a hindrance for communicating and responding quickly during a crisis.
In short, the report found that board members typically don’t associate their own practices around communication and information sharing with cybersecurity. Yet the risks of cyberattack are increasing, making this an area of growing vulnerability.
The solution? Enterprise governance management (EGM) software is the key to shoring up security and gaining competitiveness-enhancing insights, as the report notes:
Board management technology that provides end-to-end governance management is required — the ability to safely communicate and collaborate, make decisions, and use their limited meeting time in the most effective manner is paramount … boards rely on technology to help them increase their visibility across the organisation, but most have yet to successfully implement an enterprise governance management (EGM) solution that enables effective oversight into critical areas like cyber risk and crisis communication.
Poor board practices expose organisations to risk
Boards have adopted many types of technology to help them govern meetings. This includes systems for managing meetings, capturing minutes, creating and accessing board papers and more. Yet the lack of standardisation and end-to-end design means these solutions often leave the organisation more vulnerable to cyberattack, not less. The reasons for this include:
- Using insecure tools: As noted, more than half of board members use personal email accounts, and barely more than one-third (35%) have adopted closed-loop messaging systems. Tellingly, only 42% have adopted software with secure chat functionality – a critical capability as remote access, virtual deal rooms and other telepresence technologies come to the fore.
- Physical security is poor: Nearly one-third (30%) lost or misplaced a mobile device (phone, tablet or laptop) in the past year, while nearly one-quarter (23%) lost or misplaced paper assets. The ability to handle all documents electronically is a vital step forward but it must be accompanied by ‘remote wipe’ capabilities, as theft of personal communications can lead to catastrophic reputational harm (not to mention financial and legal problems).
- Security and compliance are poor: Boards know little about cybersecurity, often thanks to difficulties using or understanding technology. But they are aware of their blind spot – 41% are very concerned about their ability to secure communications and data – and acknowledge that with growing challenges around security, privacy, compliance and reputation, they must do more.
Technology solutions are here, but they’re not enough
Beyond a baseline of technology to enable corporate governance, many boards have adopted technology solutions. This is to their credit, but the solutions are too often incomplete, falling far short of providing end-to-end digital governance. This in turn leads to the risk and security challenges noted above, as well as others. Challenges include:
- Non-adoption: Less than one-third of governance responsibilities are being solved with technology; scheduling, meeting preparation and report production solutions are common, but these don’t directly address governance. Understanding risk, compliance scorecards and generating insights are three key tasks that few boards are equipped to manage.
- Setting priorities: Most boards (87%) are concerned about security, but priorities remain deadlocked. This is due in part to the problems of using different solutions to solve different problems (e.g. generating insight, understanding risk, document management, managing capitalisation tables, governance scorecards); such problems can be solved by adopting a comprehensive solution that addresses them all.
- Limited usage: Board portal software is being purchased, but full adoption by users is lagging. As the report notes, “bad practices by governance professionals must still be addressed”. This includes phasing out the use of paper documents in favour of online repositories, greater use of videoconferencing and adoption of secure communications channels.
Good governance checklist
Boards should look to adopt not just a point solution, but an EGM platform that provides a full suite of capabilities from a single intuitive interface. Essential capabilities include:
- Improved board management: Especially during a crisis, boards often experience technology as a hindrance, not an advantage; a portal platform can help directors communicate directly and securely, enabling fast and decisive responses.
- ESG performance tracking: Talent is increasingly drawn to firms with proven ESG (environmental, social and governance) credentials. Board platforms can make an organisation’s commitment to its goals transparent, providing an advantage in the race for talent.
- Meeting-time optimisation: Boards don’t always make the best use of their time, but a software solution can get members prepared beforehand and keep them on track during a meeting. This will help the organisation obtain the best value from the board’s collective wisdom and experience.
Enterprise governance management is the answer
Forrester’s research points to only one conclusion: organisations of all types and sizes should adopt an EGM platform. By providing the governance, security, communication, ESG and other benefits discussed above, the organisation will position itself to:
- Attract talent
- Protect its information and intellectual property
- Ensure compliance with all relevant regulations and industry codes, and
- Make the best use of the board’s time in both day-to-day and crisis situations.
Board Portal Buyer’s Guide
With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.
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