Topics: Corporate Governance
Topics: Corporate Governance
January 30, 2019
January 30, 2019
“Mission accomplished.” These are two words any leader loves to hear, and yet as a nonprofit educational association, NACD knows that our mission to educate directors is never completely finished. It continues and it evolves over time. With every new era in our growth, we refine what we mean by this purpose.
Shortly after I became CEO, we changed our mission statement to better reflect the value we deliver to our members. Accordingly, our mission statement reads: NACD elevates board performance by providing board members with practical insights through world-class education, leading-edge research, and an ever-growing network of directors.
If we had any doubts about the power of our newly clarified calling, our membership numbers allayed them. In December 2018, our membership numbers passed the 20,000 mark, mainly as the result of more full boards joining us.
Our members rely on us for the education, research, and networking they need to accomplish their work in an ever-changing environment. At the same time, we rely on them—especially through our nationwide chapter system—to inform us of their key concerns and insights. Through this circle of knowledge, we advance the director profession.
One opportunity to get a glimpse into the concerns of our members is our annual survey of public company directors. For example, this year’s 2018–2019 NACD Public Company Governance Survey reveals that 82 percent of its more than 500 respondents report that disruptive risks are “much or moderately more important” than they were just five years ago. And most are “concerned” or “very concerned” about intensifying global trade conflicts (67%) and domestic political volatility (51%).
In the same survey, a large majority of directors, some 7 in 10 (68%), expressed the belief that the members of their boards need to strengthen their understanding of the risks facing the company. The top five risks listed in that survey report were change in the regulatory climate, economic slowdown, cybersecurity threats, business-model disruptions, and geopolitical volatility.
NACD’s 2019 Governance Outlook: Projections on Emerging Board Matters also revealed a high level of concern about risks. In his lead article in that publication, Friso van der Oord, NACD’s director of Research and Editorial, notes that “boards have a major opportunity to become better sense makers to management in this disruptive environment,” and recommends action steps for boards. He urges boards to consider disruptive risks in board-management discussions and as part of their oversight of management, thus ensuring that management will integrate disruption considerations into strategy, performance, and decision making, and of course into risk management itself. He also recommends that boards invest in the skills—within the organization and on the board itself—necessary to navigate disruptive risks.
As boards work to help their organization navigate the potential for risk that lies ahead in 2019, they can rest assured that NACD offers a continuing supply of resources to help boards plan and prepare for these risks. We have hundreds of resources available through our website, and a team of membership advisors to help members navigate them.
Our 2018 Blue Ribbon Commission report, Adaptive Governance: Board Oversight of Disruptive Risks, makes 11 recommendations for board action and provides a toolkit of resources that empower directors to take these actions. For example, one of the recommendations of the Commission was that boards should “improve the visibility of disruptive risks in boardroom discussions, and ensure directors stay informed between board meetings.” But rather than letting directors fend for themselves, the Commission offers three tools for implementing that particular recommendation, namely a “Taxonomy of Disruptive Risks,” “The Role of the Board in Oversight of Geopolitical Risk,” and “Sample Board-Level Reporting: Scenario Analysis and Disruptive Risks.”
Such tools are not just “nice to have.” For some boards, they will become critical. As one member of our 2018 Commission stated, “Investors, regulators, and legislators keep raising the bar for boards on the oversight of everything from cybersecurity to culture.”
From my travels around the world, I can attest that our members are striving to keep pace with rising expectations and can serve as shining examples for others. That is why NACD aims to provide a continuing stream of relevant, actionable resources.
In this way we not only accomplish our mission, but also bring life to our vision: “NACD aspires to a world where corporate directors are recognized by all stakeholders as trusted stewards of long-term value creation.”
Inspired by the examples of your fellow directors, and drawing on the resources that arise from our community, I encourage you to strengthen your work as a steward of value in 2019 and beyond.
Mission and vision accomplished—and to be continued.