Law in the Boardroom in 2015
Cybersecurity leads the pack of pressing concerns, but directors and GCs are also confronting risks involving increased shareholder engagement, escalating regulatory issues, M&A, and the relative newcomer, social media.
There’s no denying the behemoth that technology has become in corporate America—and while it fuels progress, it also creates vulnerability. Accordingly, directors and GCs strongly agree that the single biggest issue companies face today is getting their arms around IT and cyber risks. But as daunting as that may be, boards, executives, and their legal teams also have plenty of other critical issues to consider—some of which, like operational risks, compliance issues, and crisis preparedness, are simply the result of managing the business, while others, such as maintaining a competitive strategy, engaging with shareholders, and harnessing social media are an outgrowth of high performance—and wanting that performance to continue. With those concerns in mind, we designed our annual Law in the Boardroom study, a co-venture with longtime partner FTI Consulting, to draw out details on the key risk issues and legal trends facing public companies today. Earlier this year, our universe of directors and general counsel answered our call for input, allowing us to gather data and opinions and compare and contrast each group’s perspectives on the top issues companies are wrestling with today.
According to our most recent survey, IT/cybersecurity is indeed the No. 1 worry for both directors and general counsel, with 90% of directors and 86% of GCs indicating they are either extremely concerned or concerned about this issue (Figure 1). Directors and GCs as a group are also concerned about operational risk, crisis preparedness, and corporate reputation—note that the latter two may be intrinsically related to IT security as cyber breaches touch off critical risk that involve a company’s preparedness and reputation.
Separately, GCs are worried about regulatory compliance, which is a big part of their job focus and was among directors’ top tier of concerns, while directors are becoming more focused on succession plans and leadership transitions, which may be related to an increase in shareholder activism.