Governing in the Age of Disruption

Every year since 2002, Corporate Board Member has been surveying U.S. public company board members to take their pulse on the issues that are top of mind, the challenges they face in the year to come and the processes they seek to improve.

For this year’s research, conducted in the fall of 2023, we collaborated with Diligent Institute and BDO USA to ask 250 qualifying board members across all sectors and representing all committee roles to share their thoughts on what they have on the agenda for 2024. The full findings are below, or you can download the PDF report.

Key Findings

2024 Outlook: Opportunities and Risks

If there was hope at the start of 2023 that the business landscape was on the mend, the events that soon followed proved many wrong. From sticky inflation that kept the Fed focused on pursuing its quantitative tightening, to the SVB-led bank run in March, to a series of debt ceiling debacles in Washington, to the ongoing Israel-Gaza conflict, the year certainly was a bumpy one for business to navigate.

According to the directors polled, few elements helped support corporate performance in 2023. In fact, of the 10 external elements we asked them to rate, nine ranked as detractors; only one stood out as a somewhat positive influence: technology—and barely, with a 46 percent non-majority.

As can be expected, interest rates and inflation topped the list of negative influencers in 2023, so it’s also no surprise that as we kick off 2024 all eyes remain on the business cycle and whether the recent rally will hold and allow the U.S. to avoid a recession.

More specifically, when we asked directors which external elements they believe will bear the greatest influence on their companies’ ability to execute their strategic agenda in 2024, the business cycle, capital markets and consumer demand topped the list—three very fundamental economic considerations for business to flourish.

What may be surprising to some is that the ever-challenging labor market ranked halfway down the 14-item list of influencers for 2024—in sixth place, even after 50 percent of respondents last year said it would have significant impacts on their company’s strategy for the year ahead.

But looking at the rest of the findings helps shed some light on why that may be: companies are planning to make talent a priority this year, with labor taking a backseat only to revenue and profit growth on directors’ list of strategic priorities for 2024.

The Board’s Strategic Focus

Amid all the disruption, our research shows boards haven’t wavered in their strategic focus, from ensuring adequate capital allocation to having the right leadership and growing the business. But doing so has become highly complicated due to competing needs to balance macroeconomics and emerging risks where control is not in the hands of the board: regulations, technological advancements and cyberbreach sophistication.

Adding to the challenge is, as noted earlier, how access to capital was cited by 53 percent of boards as having a negative impact on strategy in 2023, thus requiring boards and management teams to do more with less.

Still, one of the boards’ most significant roles is ensuring that management deploys capital by prioritizing opportunities and risk. It is no surprise then, as the research shows, that directors are placing increased importance on ensuring management is making conscious investment decisions, particularly when it comes to the timely and secure use and cultivation of AI and other technologies that can help drive effective and efficient business operations.

Meanwhile, another duty of the board—and perhaps its most significant—is CEO succession planning. The survey shows that boards are prioritizing this more now than in prior years, ranking it higher on the list of pressing agenda items to oversee—up 10 percentage points since last year, from 4th place to 2nd.

Beyond that, we note a growing recognition among those surveyed that good pipeline planning is crucial to planning for broader C-Suite executive succession: 27 percent of directors selected “talent strategy below C-Suite” as one of the most pressing topics for their boards to discuss—a new answer choice introduced this year.

All of the attention being paid to human capital at all levels of the organization may be attributed to the overall focus on competition for good talent, higher turnover rates for C-Suite executives and the need for broader experience and skillsets to manage in today’s business environment. 

In contrast, finding diversity and inclusion at the bottom of the list may not be all that surprising following last year’s findings when directors were becoming increasingly more comfortable with their organizations’ actions with respect to increasing diversity. Or, another assumption could be that DEI’s low ranking is a sign that boards are shying away from the topic as it becomes far more politicized.

Navigating the Regulatory and Geopolitical Environment

Other concerns and issues coming out of the survey include new rules and regulations surrounding all of this disruption, from cyber to AI to geopolitics. Cyber has for years topped the list of concerns for boards, but it may be particularly prominent this year, for both boards and management teams, as new rules have now been formally introduced by the SEC.

And still, despite cybersecurity being identified as one of the most challenging issues to oversee for boards, when asked how prepared their board and management team are to comply with the SEC’s new rules on cyber risk disclosure, responses were a bit lackluster: directors rated their boards’ preparedness a 6.75 out of 10, and management’s a 7.28 out of 10.

In your view, how prepared are your board and management team to comply with the SEC’s new rules on cyber risk disclosure?

Board's preparedness 6.75/10
Management's preparedness 7.28/10

Based on anecdotal evidence from our many conversations with directors, these ratings can be attributed to two key factors:

1. The complexity of the new disclosure rules in having a framework in place to disclosure the scope, nature and timing of a cyber incident and provide the impact or reasonably likely impact from “material” cyber breaches in a relatively short timeframe.

2. The requirement for annual disclosures covering risk management, strategy and governance aspects that include, among other things:

  • the process for assessing, identifying and managing material cyber risk and whether such risks have materially affected the business strategy, operations or financial conditions; 
  • management’s role and expertise associated with the above; and
  • the board’s oversight of cyber risk and if applicable, any related board committee responsibilities.

Beyond cyber, the global economy has also required boards to continue to think broadly about ramifications of various events, including the Russia/Ukraine and Israel/Hamas wars, as well as the political, trade and social tensions with China, Taiwan and Korea. Perhaps some of these may no longer being considered “emerging” risks, but they are certainly continuing risks that directors must keep closely informed on with respect to their companies’ broader enterprise risk management (ERM) framework.

Climate-related risks and disclosures form another set of issues on the board agenda. They ranked fairly low on the “emerging risk to watch” list in the survey, as U.S. boards may be taking a “wait and see” approach on final SEC rules now pushed out to spring 2024, but with the recent passage of California rules and various global rulemaking impacting businesses who operate internationally, boards are cautioned to remain vigilant and be actively preparing for compliance.

Remapping the Board

Each year, we ask directors to choose the issues they find most difficult to oversee in their role—and each year, directors place cybersecurity and data privacy at the top. This year, AI made its first appearance since we began asking this question two decades ago—unsurprisingly—but despite the focus that technology has had this past year, it barely stole the top spot from cybersecurity and data privacy, 36 percent vs. 35 percent.

It is not difficult to understand why. With any increased reliance on technological advancements comes increased opportunities for cyber threat actors to exploit. AI capabilities along with cyberbreach sophistication are changing the business landscape and remaining actively engaged in and monitoring management’s activities are imperatives for today’s directors.

Perhaps this explains why when thinking about their next director candidate, technological expertise has gained a spot on the list of criteria they seek, to the fourth place. Still, that’s not enough to dislodge industry expertise and C-Suite experience as most important—a response that’s stayed mostly unshaken over this survey’s 20+ year run.

Meanwhile, despite the labor and talent issues taking up more room on board agendas in recent years, bringing in directors with HR backgrounds is near the bottom of the list, with only 1 percent of the votes, having dropped four spots since last year.

Directors’ answers about what they believe to be their board’s biggest strengths might shed some light on the findings: Nearly half said that being able to access third-party subject matter experts to expand their knowledge base was their board’s biggest strengths. 

And when we spoke to some of those directors on this finding, most said that a general understanding of the business is most important for board service. For many directors, outside education helps to fill in technical gaps. Case in point: According to Diligent Institute, a partner in this research, more than 600 directors have already completed its self-driven certifications to address the more technical issues, such as cyber risk, AI ethics and climate strategy, and ask the right questions of management.

Shareholder Engagement

Activism remains alive and well in the post-pandemic era, more recently being supported by the Universal Proxy Rule (UPR) that allows shareholders to vote in a “mix and match” fashion for individual directors rather than having to vote for a full slate of directors.

When asked about their thoughts on shareholder activism, directors responded with general positivity, with 41 percent saying it has created greater awareness of the need for good governance, and 9 percent indicating it has helped to improve corporate performance overall.

Interestingly, when asked whether directors observed a change in shareholders’ interest to discuss certain issues, a majority of directors noted decreasing inquiries about director compensation (70 percent) and diversity and inclusion (52 percent). Not surprisingly, the top five increasing inquiries related to AI/Generative AI developments (88 percent); long-term strategic planning (86 percent); short-term growth and financial performance (83 percent), board composition (79 percent) and M&A (78 percent).

When asked more specifically about shareholder rights, a large majority of directors agreed with the idea that the UPR has given activists excessive rights and advantages (73 percent) but that the current regime for shareholder proposals is appropriate and balanced (70 percent).

The majority (58 percent) further indicated that expanded transparency through reasonable advisory votes
and proposal rights should be afforded to shareholders; though 88 percent disagreed that majority voting (i.e., uncontested board nominees need to receive more “for” votes than “against” for their seat) should be eliminated.

All of this aligns with recommendations of proxy advisors and stated belief by Glass Lewis that a majority vote standard will likely lead to more attentive directors.

BDO, a partner in this research, has issued guidance to help directors prioritize what drives shareholders and shareholder activists, and to establish clear engagement objectives. The premise is that being active in this area can foster higher transparency and trust while assisting in identifying governance vulnerabilities. Many untenable proxy contexts have been avoided when directors and management teams take the time to understand their shareholder base and are willing to communicate about issues that are important to shareholders, especially when the company has valid reasons for not addressing shareholder requests and demands.



Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq. Learn more at BoardMember.com.

Diligent Institute

Founded in 2018, Diligent Institute serves as the global corporate governance research arm and think tank of Diligent Corporation, the largest SaaS software company in the Governance, Risk and Compliance (GRC) space. Diligent serves more than 25,000 organizations and over 750,000 corporate leaders in more than 90 countries. Diligent Institute is able to tap into that broad network and highlight the diverse perspectives of corporate leaders from around the world.

Diligent Institute produces original research both on our own and in collaboration with partners, including institutions of higher education and thought leaders in the corporate governance space. We produce over a dozen reports each year, ranging from our monthly “Director Confidence Index,” which measures how corporate directors are feeling about the economy, to in-depth reviews of issues such as ESG (environment, social, governance) practices, to our AI-powered “Corporate Sentiment Tracker” that analyzes data from thousands of public sources to discern what’s on the minds of corporate leaders. Learn more at diligentinstitute.com.


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