Economic volatility drives British boards to prioritise immediate business risks.
- Future-proofing concerns like AI and climate change receive minimal attention.
- Cybersecurity is alarmingly under-prioritised among British boardrooms.
- Non-Executive Directors (NEDs) face increasing regulatory demands.
- UK boards struggle to recruit skilled NEDs amidst risk-reward challenges.
In the wake of persistent economic turbulence, British boardrooms have notably shifted their focus towards managing immediate business threats. This shift has resulted in the deprioritisation of critical future-proofing issues such as AI and climate change. Research conducted among 200 Board Directors by Norman Broadbent, in partnership with BDO, reveals a significant oversight of these emerging risks.
Only 8% of board directors identify cybersecurity as one of the top three risks to their organisations. Similarly, areas like AI and environmental concerns trail behind, with only 4% and 2% respectively considering them as significant threats. Instead, the primary concern remains the economic environment, highlighted by 19% of directors, followed by workforce talent (16%), access to finance (12%), and regulatory changes (12%).
The lack of emphasis on future-proofing activities can be partially attributed to gaps in NED expertise. Paradoxically, despite the undervaluation of cybersecurity and ESG on board agendas, both are among the top priorities for board education plans in the coming year, showing an 11% priority rate.
The role of Non-Executive Directors has evolved significantly. Once primarily advisory, it now involves complex regulatory responsibilities and stakeholder interactions. Despite this, recognition and remuneration for NEDs have not kept pace. More than half of the directors feel that the financial rewards do not align with the demands of the role, especially for those in smaller or regulated boards.
The challenge of attracting the right NED talent is compounded by the perception of an imbalanced risk-reward ratio. Almost a quarter of the boards find it difficult to recruit individuals with the necessary skills and experience. Furthermore, smaller boards struggle with low remuneration offers, while highly regulated boards deter potential candidates due to the perceived personal risks.
The prevailing economic challenges have redirected British boards’ focus from long-term risks to immediate survival strategies.
