Cybercrime: Hard lessons learned in 2022 as we keep making the same mistakes
To reduce the impact of cyber-attacks in 2023, directors need to support their organisations to keep cyber security high on the agenda.
Climate change, financial struggles, digital upgrades, and staying afloat in a changing world.
These issues facing company directors in 2023 could equally be topics of discussion around the family dinner table.
Perhaps that should not be surprising. After all, the decisions that our companies take have immediate flow-on effects in our communities.
Whether it’s a diverse strategy, a plan for staff wellbeing, or the development of a sustainable business model, the work boards do is vital to ensuring a fair and sustainable future for us all.
Each year, the Institute of Directors selects five issues that we think boards need to address over the next year.
This is the first year the issues we have identified for directors have closely mirrored issues that are of importance to every organisation, household and individual in New Zealand.
Climate change is affecting us all. The immediate challenge is to find ways to reduce our emissions and avoid drastic climate impacts. Then we will need to adapt to changes as they occur.
For boards, the focus for 2023 is organisational strategy. How much do you know about your organisation’s climate footprint, and are you ready to report on the climate risks and opportunities on the horizon?
Our advice to boards is to get a handle on your emissions, both your organisation and in your supply chains. This is what the Climate Change Commission calls “knowing your number”.
This is critical to managing emissions and will be important information to have to hand when climate reporting becomes normal.
Also, work out what the biggest risk to your organisation is and develop a mitigation and management plan for it. This will help you in the future.
Boards need to take notice of changing community expectations around profit and value. There is a shift underway from benefits for “me” to benefits for “we”.
Another way to look at it is to say that people are going to be a key focus in the future. Creating sustainable value requires boards to consider, and address, the interests of people inside and outside their organisations.
Organisations that are perceived to be socially irresponsible can suffer acute losses in customer value and stakeholder support.
We advise boards to collectively agree how their organisation approaches the idea of sharing value (including profits) among stakeholders. That includes management, employees, shareholders and, potentially, suppliers to more fully recognise their contributions.
Inflationary pressures, high interest rates and economic uncertainty are challenging the financial expectations of organisations both large and small.
It may be advisable to increase reserves to enable organisations to withstand a financial shock.
Volatility is likely to persist in revenue as customers tighten their belts, in funding via borrowing as interest rates stay high, in supply chains as global trade remains unsettled, and in exchange rates.
Boards should ensure their organisations are chasing up debtors in a timely way. They should also review expenses, investments and expenditures that are not essential for the delivery of the organisations purpose.
Any consideration of reducing staff to shore up cash reserves needs considerable care and attention. In that context, “shared value” needs to be considered and experience suggests a long-term view is needed.
Cert NZ says there is no such thing as a “quiet time” for cyber-security. Boards should get at least quarterly briefings on cyber threats and ensure they understand the organisation’s approach to information and data security.
On the other side of digital, new developments such as artificial intelligence, the metaverse and decentralised autonomous organisations (along with more familiar innovations such a cryptocurrencies) are having profound impacts on the global economy.
How will these digital trends and developments affect your organisation and what are the opportunities, and risks, they bring?
This is what I referred to earlier as “staying afloat in a changing world”. For boards it is a direct challenge to how they operate. What mix of skills and diverse thought do you have among your directors, and how you can lead with courage?
Since the start of the pandemic, there has been a growing number of boards who report meeting online – initially this was a requirement of lockdown but now it is part of the normal mix of meetings.
Financial information can now reviewed by boards in real time, rather than in terms of the previous month or quarter. Boards also report seeking new sources of information, including from external experts, when making decisions.
It is important for boards to openly discuss the way they operate and match this with their expectations for the future.
This discussion should include how the board understands stakeholder or customer needs, and what each director will do to continue to learn and grow their knowledge on evolving topics.
This article was originally published by Stuff
KP is the Chief Executive of the Institute of Directors. She is a qualified lawyer and a Distinguished Fellow of the Human Resources Institute of New Zealand, Co-deputy Chair of the Global Network of Directors Institutes (GNDI), Chair of the Brian Picot Ethical Leadership advisory board and was previously Chair of the Wellington Homeless Women’s Trust. With extensive governance and leadership experience, she is actively involved in community initiatives.
A strong advocate of diversity, KP was also a founding member of Global Women’s ‘Champions for Change’, a group of senior executives and directors who commit to diversity in the workplace, and a founding member of WiSPA, an organisation promoting women in sport, and mentors a number of business leaders.