- Focusing on cybersecurity, fraud and corruption issues, resilience, sustainability and corporate culture
- All respondents consider cybersecurity issues important
- 73% estimate that crisis prevention measures and business continuity management will be important for their business
After a period of widespread turbulence and uncertainty, the Boards of Directors they have to balance a multitude of conflicting priorities. At a time when businesses are trying to navigate in an environment that is changing drastically. In addition to the operational challenges created by the pandemic, should decode and respond to emerging economic, social, regulatory and technological trends; but also to adapt to the ever-increasing demands of investors and stakeholders to create long-term value for all.
In this complex and rapidly changing environment, boards will need to demonstrate adaptability and agility. They must reassess, in no time, their priorities for the period ahead. And finally to adapt their strategy to the new challenges.
The recent survey by the EY Center for Board Matters, Board Agenda2021, recorded the views of board members in Europe, the Middle East, India and Africa (EMEIA) and highlights the priorities, but also the strategic risks and opportunities they face.
Based on the findings of the survey, five priority areas emerge on which boards should focus their attention:
1. Boards of Directors - Cybersecurity oversight
The cyber threats facing businesses today are greater than ever before, as attacks become more extensive, sophisticated and targeted, while an increasing percentage is never detected. In 2020, a survey by EY showed that six out of ten businesses had recorded at least one major cyberattack incident in the last 12 months. Since then, the pandemic and the increase in teleworking have multiplied the risks.
The Boards of Directors should strengthen their supervisory role to ensure the resilience of their businesses during the pandemic and beyond. However, while all respondents consider cybersecurity issues to be a matter of concern to them, 52% believe that existing strategies to prevent them are extensive and adequate, while only 14% disagree with this finding.
2. Tackling fraud and corruption, and ensuring going concern )
Unethical behaviors are a rising danger to businesses. The need to react immediately to the effects of the health crisis led to the frequent bypassing of procedures, while remote work made the detection of fraud even more difficult. The motivation can vary – from seeking easy enrichment, to covering up business weaknesses – but the implications for the business are, in any case, significant, as supervisors, as well as society, are now less tolerant.
Boards of Directors must create a culture of honesty and zero tolerance. They should continuously strengthen it through active supervision, tightening of compliance rules and exploitation of the possibilities offered by technology. They should also consider whether their corporate reporting processes are adequate and transparent. A process that should be done in cooperation with auditors and regulators.
3. Ensuring long-term operational resilience
The short-term resilience of businesses has been tested during the pandemic, including by supply chain disruptions, liquidity problems and human resource management issues. Many of the business continuity plans proved insufficient. As businesses consider their post-pandemic future, the onus is shifting to long-term resilience. 73% of respondents believe that crisis prevention measures and business continuity management will be very or extremely important for their business in the coming months.
The economic impact of the crisis will continue to be felt, along with new challenges. Examples include the rapid changes in consumer behavior and expectations, the acceleration of the digitalization of the economy and climate change. In the coming months, Boards should ensure that businesses are strengthened by overseeing the creation of contingency plans, the development of alternative scenarios and the conduct of stress tests.
4. Boards of Directors - Sustainability and non-financial reporting
Consumers, employees, investors and regulators, They now require businesses to play a more active role in addressing major environmental and social challenges. At the same time, initiatives such as the Green Deal and the EU Recovery and Resilience Fund, create new business opportunities. In addition, according to EY's research, Global Institutional Investor Survey, 91% of institutional investors report that non-financial reporting played a crucial role in their investment decisions the last twelve months.
Boards of Directors must integrate sustainability into the strategy of their companies, while at the same time they must ensure greater transparency and accountability in their non-financial reporting. A structured reporting framework provides boards with the necessary information to develop a strategy. At the same time, it strengthens the confidence of society and investors in the company.
5. Corporate culture and social changes
In order for businesses to respond to the rapidly changing social environment and take advantage of emerging opportunities, it is extremely important that the corporate culture adapts to the new data.
The formation of a new corporate culture is driven by the following factors:
- Changes in the working model.
- More emphasis on flexibility.
- New needs and expectations of consumers and employees.
- Acceleration of organizational transformation.
The challenge for boards is not limited to shaping and consolidating the new culture. It also concerns its effective communication to all interested parties.
The corporate culture will be confirmed:
- Through the values and goals promoted by the Boards of Directors
- Their composition and the procedures they follow.