Companies are increasingly exposed to litigation or public criticism as a result of their strategy or operational decisions. Recent headlines feature litigation about climate action plans, media campaigns about companies’ operations in Russia, and public outcry about the way a company has implemented employee redundancies. As with all big or difficult decisions boards need to make, a return to first principles will help guide directors to the right outcome.
The imperative to reduce carbon emissions has not gone away, even with current global turbulence. All companies still need to plan how they will transition to a lower carbon economy, and many - whether because of pressure from investors or because it is likely to become a regulatory obligation - will need to publish those plans.
Cyber-security has been a regular item on board agendas for many years, but the war in Ukraine has triggered new warnings from governments around the world of potential systemic cyber-attacks. Businesses’ potential vulnerability to attack has continued to grow as they have accelerated their digitisation programmes, moved vast amounts of data to the cloud and facilitated employees working on home networks. Nation-state hackers increased their attacks in 2021 – far eclipsing the damage inflicted in 2020.
This means that a cyber-attack is almost inevitable – yet many companies are not prepared.
Workplace activism has historically been viewed as a business risk. Instead such activism could be a signpost of a healthy corporate culture. How boards and business leaders approach and respond to workplace activism is integral to risk management, employee attraction and retention and long-term sustainability.
As the diversity landscape has evolved, so too has the expectation on boards to turn diversity talk into diversity action. To achieve sustainable change, business leaders must focus on the second half of the equation: inclusion.
The benefits of AI are potentially huge: cost reduction through automation and process optimisation, and revenue generation, for example through customer targeting and opportunity identification. However, AI also brings, and amplifies, risks, notably in areas of data governance, procurement and third-party risk, operational risk and regulatory divergence. These risks need to be addressed holistically, with responsibility starting at the top.
Boards of businesses wishing to buy or sell assets face ever more regulatory hurdles including increased sanctions measures, new national security legislation and more active competition regulators. The rules are wide-ranging – and often widely drafted. Early and careful planning is essential if companies are to minimise execution risks.