New research shows that 25% of directors say their next board member hire would need to fill a skills gap at the table
New York, February 2, 2023 - Seventy-five percent of corporate directors say the roles and responsibilities of the board will continue expanding in scope over the next three to five years, according to a new report released today by Diligent, the global leader in modern governance providing SaaS solutions across governance, risk, compliance, audit and ESG, and Corporate Board Member, the market-leading publication for public company board members.
The expanding remit of boards into areas like cyber risk, adherence with regulatory requirements, ESG and digital transformation underscores the need for the right data and insights to better oversee risk. Directors also expect the makeup of boards to change in order to better respond to these risks: 23% of directors said traditional board structures no longer align with today’s increasing areas of risks and opportunities, and 25% said their next board member hire would need to fill a skills gap at the table.
“The list of issues shareholders associate with being material to a company’s success and longevity has grown, and as a result, so have the expectations and responsibilities of the board of directors,” said Lisa Edwards, Executive Chair of Diligent Institute. “While directors generally feel confident in their ability to rise to the challenge, we’re hearing that they need help effectively overseeing new and evolving areas of risk — particularly around issues like cyber risk and digital transformation.”
The report, What Directors Think, details findings from a survey of 300 directors that provides new insights into what is top of mind for America’s corporate directors in 2023. Among the top findings:
Boards struggle to oversee cyber risk and digital transformation
- Despite 42% of directors saying digital transformation is a top priority in 2023-4, 35% struggle to oversee digital transformation and the implementation of new technologies in their organizations.
- 38% of directors identify cyber risk and data security as the issue most challenging to oversee in their role, and 47% are engaging in director education programs to prepare for proposed regulatory requirements surrounding cybersecurity disclosures.
Audit committee responsibilities are expanding dramatically
- 66% of directors said the areas of risk overseen by the audit committee has dramatically expanded in the 20 years since the passage of SOX.
- 35% say the audit committee’s role rivals that of the full board in terms of complexity and scope, and 54% say internal audit plays an important role in informing strategic conversations at the board level.
Directors are suffering from “ESG fatigue”
- 24% and 19% of directors said shareholders have requested to discuss climate/sustainability and diversity initiatives in the last year, respectfully, and 40% are engaging in director education programs to prepare for proposed regulatory requirements surrounding climate disclosures.
- Despite this, 50% of directors say ESG is getting too much attention in the boardroom, indicating that while climate and diversity remain vital issues, ESG as a business approach has become increasingly unwieldy.
“Interestingly, what we hear from directors about their priorities—growing revenues and strategic planning—hasn’t changed over 20 years of fielding the survey,” said Melanie Nolen, Corporate Board Member’s Research Editor and the Director of Research for parent company Chief Executive Group. “But the proliferation of risk oversight issues and the quantification of the processes amid increased scrutiny from every group of stakeholders is significantly adding to directors’ workload.”
Read the full report here. To learn more about the evolving role of the board in 2023, register for the live webinar Boards Past, Present and Future: How to Manage Your Evolving Role, hosted by Diligent Institute and Corporate Board Member on February 21 at 1:00 pm ET.
To learn more about how Diligent supports organizations with a holistic view of their governance, risk, compliance, audit and ESG practices, visit diligent.com.
About Diligent Institute
Founded in 2018, Diligent Institute acts independently as the global corporate governance research arm and think tank of Diligent Corporation. Diligent Institute informs, educates, and connects leaders to champion modern governance through original, cutting-edge research, certifications and educational programs, networking opportunities and award and recognition programs. Learn more at diligentinstitute.com.
Diligent is the global leader in modern governance, providing SaaS solutions across governance, risk, compliance, audit and ESG. Empowering more than 1 million users and 700,000 board members with a holistic view of their organization’s GRC practices so they can make better decisions, faster. No matter the challenge. Learn more at diligent.com.
About Corporate Board Member
Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq. Learn more at BoardMember.com.