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Navigating the board’s expanding role
Against macroeconomic uncertainty, geopolitical conflict, a tight labor market and shifts in consumer habits, companies are trying to execute strategies that can keep the business relevant well into the future. Corporate governance needs to keep pace with that change.
As a director, your oversight responsibilities have greatly expanded amid this global uncertainty. Even experienced boards can’t always foresee emerging risks like cyber attacks, data loss, regulatory shifts and extreme weather. However, you are rising to the challenge by adding members with essential skills, deepening your understanding of corporate strategy and enhancing governance practices. What hasn’t changed: a commitment to leading the company to a position of strength.
In the spotlight
Directors see a risky regulatory landscape ahead
Directors already had a heightened sense for risk before adding the election into the equation, according to PwC’s latest Pulse Survey. While even the most experienced boards can't see around every corner, they should strive to remain agile, stay current with the new administration's policies and prepare for different outcomes that could disrupt or accelerate current trends. Each of those scenarios needs board input and oversight.
Foster stronger relationships with the C-suite and management, advocate for enhanced reporting on risks and fill knowledge gaps by welcoming new members with needed experience.
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[76%] of directors say the US regulatory environment poses a moderate or serious risk
Source: PwC Pulse Survey, October 2024
What to focus on in 2025
Board governance
Lead on board effectiveness
With long-standing board governance practices under the microscope, directors are taking a fresh look at board objectives and how they conduct their oversight responsibilities. Effective corporate governance starts with an independent, well-composed board that reflects a diversity of experience, skills and opinions. Getting the board’s composition right often involves a balancing act between preserving institutional knowledge, adding much needed experience and replacing underperforming members.
Use the board assessment process to help reach that ideal balance. This includes candid discussions about board refreshment, director performance, tenure and a mandatory retirement age. And try not to recoil from the idea of temporarily expanding your board when the right candidate comes along. Retirements and resignations can offer opportunities to downsize later.
Additional ways to lead on board effectiveness
Board governance
Why boards should evaluate individual director performance
Assessing directors' performance helps identify skill gaps, improve dynamics and confirms alignment with the company’s strategy.
Board composition
Board composition: Building your dream team
Find out how boards can tackle board refreshment and succession planning in a rapidly changing business environment.
[49%] of directors want at least one person on their board replaced
Risk
Prepare for the unexpected
Be aware of potential blind spots affecting your oversight abilities. While our 2024 Annual Corporate Director Survey finds that almost all respondents believe their boards are capable of guiding their companies through a crisis, previous surveys have found that many companies still do not have a formal escalation plan in place. It suggests an overconfidence that may lead boards to downplay a potential enterprise-level risk or, worse, ignore it altogether. Operational disruptions due to extreme weather, supply chain snarls, cyber attacks or political unrest can occur at any time. A holistic risk management process may not be able to stop a bad actor intent on harming your company, but boards that form a strategy for understanding crises can help their companies be resilient in the face of interconnected risks that are emerging with unprecedented velocity.
Additional ways to prepare for the unexpected
Risk
Being prepared for the next crisis: The board’s role
Learn why preparation is key to a company's crisis recovery. Boards can facilitate robust, flexible crisis plans and engage in continuous improvement.
Board effectiveness
Comparing board and C-suite perspectives
In a time of change for many organizations, boards and the C-suite don’t always see eye-to-eye. Learn more about where they differ — and what corporate directors can do to address them.
Cybersecurity and privacy
Bridging the gaps to cyber resilience: The C-suite playbook
Learn why cyber resilience is crucial with expanding attack surfaces and shifting regulations in PwC's latest survey.
[Only 15%] of directors say their boards should spend increased time on crisis management over the next 12 months
Stakeholder engagement
Engage with stakeholders
Not everyone across the organization understands the role of the board, which can lead to misperceptions about its effectiveness. Our 2024 Board Effectiveness Survey found that a majority of executives believe their board has a firm grasp of strategy and risk, but only 30% rated their performance as excellent or good. More face-to-face interactions with C-suite executives can go a long way toward fostering understanding.
Consider ramping up relationship-building efforts with key external stakeholders as well. PwC’s 2024 Stewardship Investor Survey found that investors wanted enhanced reporting on a range of topics about how the board operates and conducts oversight. These investors may use the proxy voting process to drive change so boards that regularly engage with these parties and can clearly articulate their company’s story may alleviate potential boardroom issues during proxy season.
Additional ways to engage with stakeholders
Stakeholder engagement
The director’s guide to shareholder activism
Corporate directors must be prepared for shareholder activism. Explore our guide on analyzing trends, strategies and tactics in shareholder activism.
Stakeholder engagement
Director-shareholder engagement: Getting it right
Effective director-shareholder engagement benefits both parties. Discover key steps for directors and investors to maximize these exchanges.
[55%] of investors are dissatisfied or very dissatisfied with how management connects sustainability to the company’s long-term growth strategy in reporting and other communications
Technology
Embrace new technology
Emerging technologies such as AI and generative AI have the potential to help your company reinvent the way it runs and acts on strategic opportunities. The board has an important oversight role to play to help safeguard the company while delivering value from these technologies.
To provide effective oversight, you should understand their potential — and their limitations. Tap into internal specialists and external resources. They’re a good starting point to stay apprised of the growing capabilities. Also, keep up with new use cases for specific implementations and understand how business models are changing, as well as the risks and responsible uses. Boards should also discuss management accountability matters in addition to the overall benefits and costs to the company.
Additional ways to embrace new technology
Emerging technology
The state of emerging tech today
Explore emerging tech investment priorities, how it can revolutionize business models and what makes a company a tech leader in our inaugural survey.
Artificial intelligence
The power of AI and generative AI: What boards should know
Get up to speed on how the board has a role to play in overseeing trusted AI systems to help safeguard the company while delivering value.
Generative AI
Six board priorities for an early-stage GenAI strategy
Learn to navigate risks, align with digital transformation and drive productivity gains in early-stage GenAI adoption.
[68%] of US CEOs say generative AI will significantly change the way their companies capture value over the next three years
Sustainability
Capitalize on the opportunity in ESG reporting
In the 2024 Annual Corporate Directors Survey, just 47% say that environmental, social and governance (ESG) issues are regularly a part of their board agenda — a continued decline over the last three years that indicate boards could be missing out on a massive strategic opportunity.
A wave of regulations globally means companies are likely on the cusp of publishing more ESG data than ever before. While this may simply seem like a compliance exercise, boards can engage the CEO, CFO, Chief Sustainability Officer and the ESG controller (who typically oversees ESG reporting) to determine whether the data reveals strategic insights. Companies that collect, measure and manage this data in real-time have an opportunity to transform their decision-making process on product sustainability, decarbonization and supply chain resilience by grounding it in information that can be analyzed throughout the year.
Additional ways to advance the opportunity in ESG reporting
Sustainability
Sustainability and ESG oversight: The corporate director's role
Understand the board's role in overseeing environmental, social and governance issues.
Digital oversight
The impact of technology on climate oversight: What board directors need to know
Mounting pressure from various stakeholders is forcing companies to rethink carbon emissions. Do you have a plan in place?
Regulation and policy
How your company could increase the ROI of its sustainability strategy
Technology can help you take advantage of ESG tax incentives and credits, like the Inflation Reduction Act, to advance the value of sustainability initiatives.
Explore executive insights
Identify the key focus areas of your colleagues.
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