Board agenda 2018 Top priorities for European boards
The pace and scale of disruption will continue to present a number of challenges to companies; however, opportunities to harness new technology and trends will undoubtedly emerge to reshape business models, improve companies’ performance and value creation, and focus on and address emerging risks. In this continually changing environment, board members need more than ever to focus on key and strategic priorities.
That disruption takes many forms, including political instability fueled by economic uncertainty across the world, digital transformation and business model disruptions, greater scrutiny of corporate behavior, and regulators that are under increasing pressure to develop frameworks that foster growth but curb short-termism and unfair practices.
In order to reflect these dynamics, Board agenda 2018 covers an increased range of disruptive factors. They are all evolving quickly, and it’s unlikely that “tried and trusted” approaches and remedies will be sufficient by themselves. In practice, that means board members must look outside the boardroom, into the business and beyond, for help in navigating this new landscape.
Building on Board agenda 2017, with its top priorities such as geopolitical risks, regulatory change, digitalization and its business impact, corporate compliance and culture, Board agenda 2018 confirms that all these remain highly relevant. Managing tax risk will be particularly important in 2018 in respect to US tax reform and Brexit.
The 2018 edition draws on the expertise of professionals to outline the most pressing topics and questions facing boards and audit committees: communicating effectively with stakeholders; developing a robust corporate reporting framework; optimizing decision-making around capital allocation; identifying, developing and retaining the best and brightest talent; anticipating and mitigating risks through internal processes and external partnerships; and developing potential board directors.
In addition to addressing risks and identifying growth opportunities, board members are facing a set of more fundamental questions about the behavior and purpose of both their businesses and themselves. They center on defining corporate purpose, communicating what the business stands for, and demonstrating a commitment to the creation of long-term value by sustainable and socially acceptable means.
These pressures require boards to look not just outward, but inward too. Does the board have the right mix of skills? Is the board empowering its people to make smart decisions? Are remuneration strategies sustainable, in line with industry standards and defensible, given the increased scrutiny of executive pay? Directors who are able to understand the pressures and design effective strategies can set the tone for the business’s future.
Understanding how these trends will affect the business in the short and longer term is now the key challenge facing boards. The opportunities presented by the fast-moving corporate landscape will not wait. Inaction is not an option.
And the thread that ties all of this together is digital technology. Today’s board directors are fortunate to have at their disposal an unprecedented set of tools with which to modernize and grow their businesses. Digital is the engine of both opportunity – opening up new markets and potential business models – and challenge, fueling disruption in every area of the business and threatening established models and methods. Indeed, from artificial intelligence and cybercrime to more integrated supply chains and smart factories, digital is the new normal.
Our suggested priorities do not appear in order of importance and will not be of equal relevance to every board or every organization. However, we believe they encompass the issues that should be high on the agenda of all boards, regardless of their structure. In addition, we have provided a list of key questions for board members to consider in relation to each priority.
The EY Center for Board Matters anticipates the following priorities will be top-of-mind for board members in 2018:
- Developing long-term value and defining corporate purpose
- Interacting with shareholders
- Focusing on corporate reporting
- Optimizing capital allocation decisions
- Enhancing talent and corporate culture
- Defining reward
- Strengthening partnerships and governing risk
- Managing cyber risk – a new era of security
- Reflecting new responsibilities for audit committees
- Creating boards of the future
Download Board agenda 2018 as a printable document.