Board Agenda

The wars in Ukraine and the Middle East, continuing US-China and US-Russia tensions, the potential for political and social disruption posed by disinformation and cyberattacks, and elevated geopolitical and trade tensions globally, combined with economic risks, including interest rates, market volatility, and the risk of a global slowdown, will once again drive volatility and uncertainty. Not only supply chain strategies need to be adjusted.

Boards will need to help management reassess the company’s processes for identifying the risks and opportunities posed by this global disruption and the impact on the company’s long-term strategy and related capital allocation decisions.

As generative AI (GenAI) moves from market buzz toward business value and large-scale rollout, it is critical that boards understand the opportunities and risks posed by the technology. Companies that will excel in using GenAI technology at scale understand that it’s also a leadership journey. 

Given the strategic importance of the technology, GenAI will be a critical priority for boards in 2025. The following suggestions will help boards to focus and structure their oversight efforts.

• Understand the strategy to develop business value with GenAI and monitor the trajectory of deployment

• Monitor management’s governance structure for the deployment and use of GenAI, including the management and mitigation of GenAI risks

• Ensure the quality and accuracy of GenAI output

• Assessing board oversight

The explosive growth in the use of GenAI is also prompting more rigorous assessments of data governance frameworks and processes more generally, as well as the steps being taken to help ensure that management’s cybersecurity risk management practices are keeping pace with increasingly sophisticated cyber threats enabled by GenAI. This is a significant undertaking requiring board attention.

Three key areas of board focus are:

• Adequacy of the company’s data governance framework and processes

• Enhancement of cybersecurity risk management processes to address AI risks

• Structure of board oversight of cybersecurity and data governance

How companies address climate change, human capital management, diversity, and other ESG issues continues to be viewed by many investors, research and ratings firms, activists, employees, customers, and regulators as fundamental to the business and critical to long-term value creation.

However, the pushback against ESG – including the backlash against green policies and climate disclosures in the US and Europe as well as energy industry concerns about the costs associated with a rapid shift from oil and gas to renewable energy – has caused many companies to reassess their ESG initiatives.

Also the management’s efforts to prepare for new reporting and assurance initiatives that will dramatically increase climate and sustainability disclosure requirements for companies in the coming year will be an important area of board focus and oversight.

Few board responsibilities are more important than hiring and replacing the CEO – a reality that continues to generate media attention, particularly if the board is caught flatfooted.

A key question for the board is whether its CEO succession planning process is keeping pace and evolving to identify the CEO skills, traits, characteristics, and experiences necessary to drive the development and execution of the company’s long-term strategy and position the company for the future.

Does the company make it safe for people to do the right thing? Headlines of sexual harassment, price gouging, aggressive sales practices, and other wrongdoing continue to keep corporate culture front and center for companies, shareholders, regulators, employees, and customers.

Boards themselves are also making headlines, with investors, regulators, and others asking, “Where was the board?”, particularly in cases of self-inflicted corporate crises.

Given the critical role of corporate culture in driving performance and reputation, boards must act proactively by monitoring leadership's tone, addressing misconduct decisively, heeding early warning signs, and ensuring the availability and trustworthiness of reporting mechanisms.

The increasing complexity and fusion of risks unfolding simultaneously requires a more holistic approach to risk management and oversight. At the same time, investors, regulators, ESG rating firms, and other stakeholders are demanding higher-quality disclosures (particularly on climate, GenAI, cybersecurity, and other ESG risks) and about how boards and their committees oversee the management of these risks.

Given this challenging risk environment, many boards are delegating risk oversight responsibilities to standing committees for a more intensive review than the full board could undertake. Information sharing and coordination amongs the committees to avoid overlaps are crucial.