British boardrooms are focusing on immediate survival over long-term risks like climate change and AI.
- Economic volatility is seen as the greatest risk by 19% of board directors.
- Future-proofing activities, such as addressing cybersecurity and environmental issues, are deprioritised.
- Non-Executive Directors (NEDs) face increased regulatory demands with insufficient recognition and remuneration.
- A significant portion of boards struggle to attract NEDs with the right skills and experience.
In a rapidly changing business environment, British boardrooms are increasingly inclined to focus on immediate risks rather than long-term potential threats, as highlighted in a recent report by Norman Broadbent in partnership with BDO. The research, which surveyed 200 board directors, indicates that critical areas such as climate change and artificial intelligence (AI) are relegated in favour of pressing economic challenges.
Amid ongoing economic fluctuations and complex trading conditions, the report underscores that only a meagre 8% of directors consider cybersecurity a top-three risk to their organisations. Furthermore, a mere 4% concern themselves with AI implications, while environmental issues are even less prominent at just 2%. The spotlight remains on economic woes, with 19% of boardrooms identifying the economic climate as their foremost risk, closely followed by concerns over workforce talent, financial access, regulatory changes, and geopolitical influences.
Recognising a potential gap in Non-Executive Director (NED) expertise, the report notes that neglecting future-proofing activities might reflect this deficiency. Despite the evident low prioritisation of cybersecurity and environmental, social, and governance (ESG) concerns in risk agendas, these topics feature prominently in board education programmes for the upcoming year. Both cybersecurity and ESG are highlighted by 11% of boards, with AI following at 7%. Requests for governance, legal, and compliance training lead at 14%, reflecting the evolving regulatory pressures on NEDs.
The report, “Navigating a New Era for the Non-Executive Director,” was unveiled at a London event, spotlighting keynote speaker Malcolm Wall. It portrays the NED role’s evolution into a multifaceted and demanding position, no longer limited to offering advice but encompassing strategic decision-making, increased compliance, and stakeholder engagement. Despite these expanded duties, the compensation and recognition for NEDs appear inadequate, leaving many frustrated. Over half of the respondents (53%) express concern that remuneration does not align with the role’s demands, particularly among NEDs of smaller and publicly listed companies.
A notable finding is that 96% of boards face difficulties in recruiting NEDs with the requisite skills and experience. Nearly 23% struggle to find individuals with the necessary competencies, knowledge, or experience, and 29% cite challenges tied to the risk/reward ratio, the associated time commitments, and the perceived level of compensation. Smaller boards attract fewer NEDs due to modest pay, while the personal risks involved deter candidates from regulated boards despite higher potential rewards.
The future of British boardrooms may depend on recalibrating the role and recognition of Non-Executive Directors to better align with evolving responsibilities.
