I recently had an opportunity to attend a seminar by the Australian Institute of Company Directors (AICD) on how the business landscape is changing and the vital role of the Board in ensuring that their respective organizations are ready to embrace such change.
I was pleasantly surprised to observe that the discussion on the “Role of the Board” went beyond its traditional boundaries. Whether it is the new “Technological Revolution”, Cyber Risks or even a matter of “Trust”, the disruption to businesses is forcing the role of the Board (and for a good reason) to go beyond the usual realm, such as, providing continuity and direction for the organization, selecting c-level executives, governing organization based on broad agreed objectives and policies and fiduciary duties.
The fast changing and uncertain business climate, in my opinion, have pushed the Board members, to evaluate their role and forced them to make some radical changes to have a Board Composition which necessarily does not reflect the traditional Board cohort. The challenges of “today” faced by organizations have resulted in the Board to have diversity in their “functions”, “thoughts”, “experience”, “gender” and “culture”.
The role of the Board is evolving and is more proactive than reactive. The burden, of risks to organization’s reputation, of commitment to their stakeholders, and to the larger society is vital in shaping the new role of the Board. The extended role shouldn’t just take into consideration what’s disrupting the business today but also how businesses and larger industry sector will be in 5, 10 or even 20 years. The role needs to include more strategic responsibilities, focusing on future transformations and not just current changing trends.
The Board needs to be hands on and be involved throughout the strategy formation process and hence the responsibilities of the Board need to go beyond the board meetings and should be more collaborative in nature with the management of their organizations. This will help the Board to be more responsive to current threats to the organizations from various factors such as Cyber Risks and data thefts.
Furthermore, uncertainty in the businesses caused due to increase in continuously changing global regulatory and compliance requirements and keeping up with the demands of investors is forcing the Boards to come out of their protective shell, be more accountable, and to embrace the shift in their role from just awareness to governance.