Blogs

“What drives board effectiveness amid uncertainty” from Corporate Board Member and EY explores how directors are viewing and effecting their strategy oversight responsibilities in the context of the challenging and unstable macro environment based on a Q1 2025 survey of nearly 200 public company directors.

Notably:

• Nearly three-quarters (73%) of directors report that because of the constant state of unpredictable change, their company’s strategy is constantly evolving, and 60% indicate their company’s strategy will need to change within 12 to 18 months.
• The vast majority of directors believe that their boards and management teams align on risks and risk appetite. Interestingly, however, one-third of directors would like management to assume more risks currently in alignment with the risk appetite.
• The report associates boards with the greater ability to promote corporate resilience through a longer-term perspective as compared to management. While the external factors of industry and economic disruption were identified as the most significant barriers to improving resilience and the ability to anticipate, prepare, respond, and adapt to change, internal factors including financial constraints, management’s focus on short-term issues and performance targets, and bench strength below the executive leadership team were cited as impediments by about one-third of directors.
• Over half of directors cited director skills and background expertise, boardroom culture, and directors’ understanding of the business as attributes most commonly associated with the board’s agility to anticipate and respond to change.

The report suggests boards engage in key conversations about strategic resilience, corporate strategy, risk tolerance, and strategic assumptions to promote corporate resilience and outlines a series of questions associated with each to help inform the board’s discussions.