View: Top 5 trends that Boards should consider in 2021

The year 2021 will require boards in particular to understand the new rules and business risks, and the top five trends that board members should consider prioritising, are:

Technologies such as data analytics and artificial intelligence have created enormous shifts in the business landscape across sectors, and it holds a tremendous value from a business perspective to not only identify the missing opportunities but also to manage the emerging risks.

Today’s boardroom conversations must cover the broader potential impact of data analytics and artificial intelligence on the particular organization’s risk management agenda.

Board members must provide the right perspective in building a risk intelligence mechanism for identifying future risk scenarios, inculcating technology-enabled audits, and automating compliance management and monitoring.

Advocacy for data analytics and artificial intelligence will be one of the key components to realize and sustain trust. Board members will need to challenge the management of organizations to reimagine and reframe the way the organization delivers long-term value and build trust with its stakeholders.

Owing to increasing pressure from stakeholders and to protect reputation, it has become important for board members, CEOs and investors to sit together frequently and discuss the business and global challenges to improve the long-term performance of the organization.

Being stakeholder-centric is the need of the hour, and it can only be achieved by strengthening communication and engagement between boards, CEOs and investors.

This will only happen by developing mechanisms to collect data on their views on the key challenges and bring out actionable insights for a comprehensive corporate response.

Organic growth opportunities as well as M&A-led opportunities, both play a significant role in the organization’s revenue growth. Today, particularly from an M&A perspective, technology lies at the heart of deal strategy for most organizations.

Organizations have been betting big on technology before COVID-19 hit us, but the pandemic really accelerated the adoption of technology (including artificial intelligence, machine learning, cybersecurity, analytics, etc.).

Boards must not negate this very influential external trend as part of their deal strategy, which has a direct impact on hiring (considered as a top organizational risk to grow their organization) and new product/service capabilities. While looking for inorganic growth, even the valuation framework needs to align with the new digital world.

Having the right talent strategy is more important than ever, as it plays a much greater role in driving long-term value. Boards should not only oversee talent and culture from a c-suite perspective but should go beyond that (i.e. mid-level, starting-level) and oversee other talent and culture-related issues (e.g. attrition rates, employee engagement scores, diversity and inclusion metrics, among others) across the organization in order to boost the organization’s performance and enhance its reputation.

In particular, boards should closely watch out for the whistle-blower hotline activity to drive appropriate action keeping in mind the reputation of the organization. Even within boards, diversity and inclusion is a must to avoid any ‘groupthink’ and to embrace new approaches to mitigate future risks.

Getting the KPIs right, having a forward-looking approach, understanding and addressing the needs of customers, employees, investors, regulators and other key stakeholders, communicating the organizational values, among others, are just some of the methods that an organization can adopt to drive long-term value.

That is where boards can add tremendous value, i.e. to create the right culture to enable these different facets of long-term value creation. At the same time, boards have a public interest responsibility to make their organizations more sustainable.

Boards need to ensure that the investments which are made, are responsible investments. Similarly, they need to make sure that investors are provided with robust information on how their companies are affected by and are responding to, climate change and other major social and environmental issues; cause all these factors makes the stakeholders believe that sustainable companies are more likely to create long-term value.

The Environment, Social and Governance (ESG) agenda will be even more tightly linked with the creation of long term value for stakeholders.