Last week in Washington, D.C., directors convened at the National Association of Corporate Directors’ Spring Forum to hear experts discuss how boards can prepare for the future of American business. Panel topics ranged from oversight of emerging risks to talent development and even advertising. The common thread was clear: directors will continue to be confronted with nontraditional challenges.
Case in point: The aftermath of the cyber attack at Target has made the challenge of effectively overseeing cybersecurity risk a priority. ISS recently recommended voting against seven of Target’s ten board members, alleging that those directors inadequately prepared for data risks. Many are looking to the retailer’s tribulations as a sign of things to come: Directors may face additional scrutiny when efforts to oversee quickly evolving, highly technical risks fall short.
Instead of leaving directors anxious, panel discussions throughout the forum honed in on the following actions directors can take to prepare their companies to capitalize rather than capitulate to disruptors:
- Leverage Big Data. With massive data collection becoming common practice, former White House CIO Theresa Payton and other speakers suggested using data from your company’s regular web traffic in order to cull anomalous and potentially malicious network activity from baseline data traffic.
- Find a Cyber Risk Tolerance. Futurist Edie Weiner said that we can only exist in a state of “cyber insecurity.” Pragmatically speaking, companies cannot fend off every attack, but they can identify their most important assets and ensure they are safeguarded. Insecurity, to some degree, has to be accepted.
- Look for Long-Term Trends. Focusing on quarter-to-quarter changes might obscure the large sea-change entire industries may be facing. Erwann Michel-Kerjan, executive director at the Wharton Risk Management and Decision Processes Center, challenged attendees to do their homework before pursuing a strategy, saying that the term “black swan” is too frequently used to describe predictable catastrophes. When given appropriate thought, he said risks can be teased out, analyzed, and planned for.
- Secure the Necessary Talent. A powerhouse panel — Tucker Baily, partner at McKinsey & Co.; Earl Crane, former White House director for Federal Cybersecurity Policy; Linda Medler, former director for the capabilities and resource integration at the U.S. Cyber Command; and Krishnan Rajagopalan, managing partner at the global technology and services practice at Heidrick & Struggles—agreed on at least one point: the gravity of having not only those talented in understanding the cyber and IT worlds within the company, but also that those employees are able to discuss these topics with the board in simple and actionable terms.
- Transparency is Here to Stay. Jeff Rosenblum, co-founder of Questus, looked through the lens of advertising to show how the connectivity of the social media age is making the machinations of every company more visible. For him, companies in the future ought to be more transparent, disclosing their thinking, actions, and the effects of those actions.
Undoubtedly, the best responses to these rising changes are evolving, becoming more efficient and effective. NACD, through its Directorship 2020 initiative and other programs, remains committed to sharing insights from thought leaders while providing a framework in which directors can better understand a world permeated with risk.