In an increasingly digital world, businesses and their boards are interested in new technologies and best practices—but struggle to keep up with the pace of change, research conducted by Corporate Board Member in partnership with Diligent Institute shows.
The 2023 20th anniversary edition of What Directors Think, an annual survey of U.S. public company directors, revealed that digital innovation and cybersecurity remain the top two most challenging areas for directors to oversee, in line with results from previous year’s reports, with 38% and 35% of respondents respectively selecting these options.
Meanwhile, results from the January edition of the Director Confidence Index—a monthly flash poll of board members also conducted by Corporate Board Member and Diligent Institute—show that directors anticipate spending more time discussing cyber/data security and digital strategy in board meetings in 2023 compared to 2022, at 41% and 25% of respondents respectively.
Directors also indicated that cyber and digital/tech strategy are the top two areas they want more training and education around in 2023, at 46% and 44%.
The trend continued into February, when we asked the Director Confidence Index respondents about the areas of their businesses from which they want better data, insights and information. Overwhelmingly, directors said they want more insight on their company’s tech and digital strategy, with two-thirds of directors selecting this option.
This focus on cyber and new tech is also reflected in Diligent Institute’s Corporate Sentiment Tracker, an AI-powered tool tracking which topics corporate leaders are speaking about the most frequently in the news. At the moment this article is being written, “AI” is the top term used in the past 14 days, with other terms like “ChatGPT,” “tech” and “development” making their way into the top 20. Meanwhile, “Emerging Technology Risk” as a broader topic area has also been topping the charts in the past 14, 90 and 365 days.
Cyber issues and questions around emerging technologies now occupy a sort of Bermuda Triangle in the boardroom. Directors understand that having robust cybersecurity structures and processes in place, as well as an innovative digital strategy, will be crucial to their organization’s success. Corporate leaders express interest in these issues both according to surveys and when speaking publicly. However, a skills gap exists—board members have acknowledged that they could use more guidance, information and education on these cyber and tech matters so that they can provide proper oversight.
The good news, according to the What Directors Think findings, is that directors are taking steps to address this gap. Our results show that boards are bringing in outside experts, getting more briefings from their legal teams and engaging in education or training programs to upskill themselves, particularly in light of proposed rule changes from the SEC around cybersecurity disclosures.
As the number of issues being elevated to the board level continues to grow, the pressure from competitors and regulators for directors to effectively oversee digital and cyber strategy isn’t likely to abate. The question for boards now is are you receiving the right information from your management team on cyber, data security, digital innovation and emerging technologies to provide the right level of oversight? And how is your board ensuring continued director education in these areas? In other words, are directors levelling up?