Where boards must stay alert

In 2025, boards and governance will face significant challenges and opportunities. Risks continue to pop up unannounced and they have a habit of multiplying year-on-year in ways we can’t predict. Boards are on the front lines, and remaining vigilant and responsive to emerging trends and threats is a complex job.

Diligent Institute research has identified many areas where boards must remain alert, with the most pressing being generative AI, cybersecurity, geopolitical risk, and talent and culture management. The research involved 65 board members, C-suite leaders and subject-matter experts.

1. UPSKILLING AND GETTING EXPERTS IN THE ROOM TO HARNESS AI

Directors and boards are increasingly concerned about two things regarding AI: What are the risks of moving too quickly? And what are the risks of not moving quickly enough?

Digital-native companies are exploring untapped innovation – asking where the sky is most blue – while non-digital native companies are focusing on efficiency and cost reduction. Boards will need to ensure strong safeguards around AI, particularly for data security and privacy, and will seek experts who have been working at the coal face the longest. Boards will be asking, ‘How can we do this in a way that doesn’t erode stakeholders’ trust?’ and ‘How can we do this in ways that increase our value creation?’

The key to good governance and boards lies in asking the right questions and getting the most important context. The power of board members is their ability to ask straightforward questions that are actually profound.

2. INCREASING NEED FOR AGILITY AMID CYBER RISK AND GEOPOLITICAL UNCERTAINTY

When boards look at their composition, they will be asking if they have the talent that’s fit for purpose. Not the talent that they needed last year, the talent they need three years from now. You can’t have an expert in everything, otherwise the board will be 1,000 people strong. Zero in on business strategy, while bringing in external expertise as needed.

Real-time dashboards will be crucial for monitoring risks, and boards may need to meet more frequently to stay ahead of developments. A practical example is cyber risk. It feels like we have been talking about cyber risk for 15 years, and there’s a reason – it just keeps getting worse.

Scenario planning around high-impact risks will allow boards to identify necessary tools, data to track and training to implement. We will be moving way too fast to wait for the perfectly crafted board deck once a quarter.

We live in an era of great volatility, uncertainty, complexity and ambiguity. The right approach is to figure out the range of things that might derail the organisation, and the probability of them happening along with the severity of impact if they do.

3. KEEPING THE BOARD CONNECTED TO MITIGATE TALENT AND CULTURE RISK

With ‘talent risk’ and ‘culture risk’ appearing many times in the research, directors and boards will become increasingly interested in reconnecting with the culture of their organisation.

Fifty-eight per cent of the workforce are millennials, with many hired during the pandemic. They have no experience of the ‘return to office’ concept – they have never been in one and what that culture previously looked like. For boards, this is no longer a conversation about how to please a small number of young employees. This is a major area of talent risk.

Boards will need to engage more regularly with people at all levels of the organisation to understand and address talent and culture risks, probing management to ask, ‘what do we need to do differently and what tools do we have in place to keep everyone connected?’

Employee data that can be seen on a dashboard, such as retention and turnover rates, alongside the percentage of people promoted from within and active engagement in mentorship programmes, will become increasingly important.

In this context of declining engagement and the ongoing goal of retaining the top talent, boards will have a greater duty not to stifle innovation, mentoring or talent coaching.

4. BECOMING MORE NIMBLE AS GEOPOLITICAL TIDES SHIFT

The political landscape is becoming more unpredictable, making it harder for businesses to plan. As the pendulum swings back and forth, the arc of that swing is becoming more and more extreme. That means the job for corporate boards is getting a lot harder.

Boards will need to forge stronger relationships with government agencies and engage in scenario planning to navigate geopolitical risks, ensuring the safety of employees and the continuity of supply chains.

Information and readiness are key to keeping employees safe, first and foremost, but also keep suppliers and supply chains running.

CONCLUSION

Boards must balance the need for expertise with the agility to adapt to a rapidly changing environment. Enhanced dashboards are essential for monitoring real-time risks and maintaining a future-focused approach. By staying informed, proactive and connected, boards can effectively navigate the complex landscape of 2025 and beyond.

To find out how to leverage AI for better board meetings, click here.