“ The Deloitte Global Center for Corporate Governance (“The Global Center”) is pleased to present the latest edition of its annual global director survey: Director 360°: Growth from all Directions. This survey, now in its third consecutive year of publication, provides a unique perspective on the concerns that boards of directors face around the world. Our analysis is based upon surveys and interviews with 317 directors at public and private companies in 15 countries. The survey results highlight changes in key governance, regulatory, and compliance concerns that companies around the world face in today’s business environment.
The Global Center solicited views from directors on a variety of corporate governance matters, ranging from board composition and risk oversight, to the directors’ role in strategy. In addition, this year’s survey expanded to include topics such as regulatory trends and associated perceptions, cyber security, internal audit, compliance, and anti-corruption regulations—among others. Among the key findings of this year’s survey is that the global financial crisis weighs less heavily on directors’ minds and boards’ agendas. Based on the survey responses, it appears that boards are becoming more confident that the effects of the global financial crisis are behind them.
This finding is supported by the following data from the survey:
• When asked to select the top three issues impacting boards in the past 12 months, only 20 percent of the respondents cited the global financial crisis as a top boardroom issue. This represents a decrease of 23 percentage points from the prior year—the largest decrease for any top issue year-over-year. In the previous year’s survey it was the highest ranked boardroom issue, only to drop to the sixth slot this year.
• As to issues that are replacing the financial crisis in the minds of directors, we found 20 percent more respondents pointing to performance—as the second most often discussed issue, behind strategy. Apart from performance and strategy (which registered an 18 percentage point increase) other topics gaining importance included growth (13 percentage point increase) and shareholder value and investors (11 percentage point increase). These results may indicate that boards are focusing less on recovery from effects of the financial crisis and more on company performance and operations and on the creation of long-term sustainable growth.
Given the growing number of cyber-crimes and technology security breaches in large organizations, one might expect technology and its associated risks to be high on the boardroom agenda. However, our survey results indicate that over a quarter of the global directors surveyed do not discuss technology risks. Of those boards that do discuss them, about half (51 percent) included cyber security in those discussions. Given the prevalence of cyber-attacks and their associated reputational and financial harm, cyber security may become more of a boardroom priority over the next 12 months. In addition, nearly two-thirds of all directors surveyed stated that their board does not use social media. This raises potential questions: as the world moves to an increasingly digitized environment, are boards fully prepared to deal with the unprecedented business and reputational risks their organizations face? Are boards equipped to monitor and engage with their evolving stakeholders?
Our survey found shareholder engagement to be a topic of interest. Going forward in this post-crisis environment, investors and other stakeholders can be expected to closely monitor board activities. Indeed, nearly 70 percent of respondents expect the level of interaction between shareholders and boards to increase over the next few years. It would thus seem reasonable to assume that engaging with investors would be a priority for directors. Yet our survey results indicate that despite acknowledging increasing levels of shareholder scrutiny, 61 percent of respondents noted that they have not developed and implemented a shareholder engagement policy.
On the topic of boardroom diversity, some countries have enacted regulations or legislation to increase the presence of women, while in other countries organizations have implemented their own related initiatives or policies. In our survey, nearly two-thirds of respondents indicated that their organizations have not introduced diversity policies for board composition. One obstacle to greater diversity could be the long tenure of directors and the lack of term limits or age limits on board service. Our findings show that 62 percent of directors surveyed indicated that their boards have not implemented term or age limits, or that they were unsure whether they have such limits. Boards appear to be implementing term limits for director service (30 percent) almost twice as frequently as age limits (17 percent).”
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