News & Insights

Directors Governance Center

December 22, 2015

Top Board Priorities for 2016 (EY Report)

The Ernst & Young Center for Board Matters recently published a report on the top challenges and priorities that boards of directors will face in 2016. Among other matters, the report noted the five emerging issues below that will command substantial board focus in 2016 and beyond:**Board effectiveness, composition and refreshment* . The EY report notes that among Fortune 100 companies with retirement-age policies for board members, 19% of directorships are held by individuals within five years of their company's designated retirement age. As boardsengage in strategic director succession planning in the coming year, they will seek to balance the viewpoints of more tenured directors with fresh perspectives of new members and will seek to establish a diverse skill and knowledge base among board members to meet the challenges associated with an increasingly global economic environment undergoing rapid technological and demographic changes.

**Investor and stakeholder engagement* . As investors seek more meaningful engagement with directors and committee chairs on issues such as strategy and board succession planning, effective communication with shareholders is becoming increasingly important for boards. In 2016, boards will seek to ensure that designated directors are prepared to engage with investors directly and ensure that company filings are not merely "compliance documents," but rather, effective communication with their company's current and prospective investors.

**Cybersecurity and preparedness* . EY's 2015 Global Information Security Survey showed that while protecting confidential company and customer information is a critical emerging issue facing boards, only 7% of organizations believe they have robust incident response programs which are properly integrated with the organization'sbroader threat and vulnerability management efforts. EY's report notes that boards will continue to refine existing crisis management plans and implement new plans as necessary, focusing on data migration and swift response procedures that minimize risk exposure in the event of a cybersecurity breach.

**Oversight of Enterprise Risk Management (ERM)* . An organization's ability to effectively manage operational, financial, strategic, compliance and reputational risk is key to developing a healthy risk culture. In 2016, boards will continue to focus on managing their organization's respective risk culture in each of these areas with an eye towards continued long-term value creation for investors.

**Oversight of talent risk management* . EY's report notes that a firm's human capital, talent and culture, can drive innovation, growth and performance within theorganization. As such, three out of four directors believe boards will remain focused on human capital management, retention and strategy in 2016. Ernst & Young is a global leader in assurance, tax, transaction and advisory services. The EY Center for Board Mattersis committed to bringing together and engaging with boards, audit committee members and investors to exchange ideas and insights.