Report Presents Relevant and Timely Questions Directors Should Ask in This New Era

The coronavirus pandemic has presented a company's board of directors with unforeseen challenges that tests long-held principals in governance and leadership. The balance of mitigating risks while keeping an eye of corporate growth will be a challenge for directors in this new era. Taking a philosophical approach to business strategy throughout my professional career, I support the following notion made by EY, a multinational professional services firm: "We believe that better questions lead to better answers and a better working world. Likewise, we believe that a board's most effective tool is asking compelling questions. These questions can lead to better governance and organizations that drive value for all stakeholders."

Produced annually by the EY Center for Board Matters, the 2022 report presents a list of relevant and timely questions, segmented by four themes, for a company's board of directors to consider:

Theme 1: Strategy and innovation - Strategy that positions companies to innovate and differentiate for a sustainable future

1. How is the company rethinking its definition of "long term" to maximize value while also focusing on near-term risks and opportunities? Is the strategy appropriately focused not only on where the company is going, but where it can go?
2. Are material environmental, social and governance (ESG) issues considered in the company's long-term strategic planning? How do the company's business model, practices, products, and services address urgent environmental and social challenges as we move toward a more inclusive and sustainable future?
3. What data and metrics are being used to assess the health and vibrancy of the organization's culture and its alignment with strategy? Is the culture appropriate to inspire and enable innovation?
4. Is the company's capital allocation aligned with the necessities of its long-term strategy? How is the company addressing barriers toward optimal allocation?
5. Does the board have the appropriate governance process to oversee strategic investments that seed innovation to change the game? How is it supporting the acceleration of idea generation, trialing and assessment while also encouraging appropriate risk-taking?
6. Has management appropriately considered partnerships, joint ventures and alliances, along with M&A, to accelerate the strategy, particularly with longer-term adjacent and transformational opportunities?
7. Are newer and innovative technologies, including digital platforms and cryptocurrency solutions, appropriately leveraged to accelerate goals and objectives? How can these technologies accelerate the speed to market and enhance virtual collaboration and customer engagement?
8. What is the company's transition plan for thriving in a net-zero future? Is that plan integrated with the company strategy? Does it include specific short-, medium-and long-term greenhouse gas reduction targets and related decarbonization initiatives? How is the company preparing for additional climate-related disclosure requirements?
9. How is the company investing in protecting and restoring the natural ecosystems and biodiversity on which its business relies?
10. Does the board understand the company's supply chain constraints? Is the board confident that the supply network is flexible and agile amid continued global supply chain challenges? How is it addressing increased calls from stakeholders for sustainability and less waste?

Theme 2: Talent oversight - Broader oversight of culture and talent that is prepared for the transforming labor market

1. Do scenario analyses consider an appropriate range of extreme and even improbable scenarios, including existential threats? Do they incorporate the potential compounding effects of various risks, such as supply chain disruption, talent acquisition and retention, inflation, future interest rates and an evolving tax landscape?
2. Are contingency and response plans related to material and high-impact risks, such as cybersecurity breaches and natural disasters, periodically simulated and reviewed with the board?
3. How is the company revisiting and adapting its risk management strategy and management's approach to the three lines model in response to potential changes in the external and internal environment, changes in the strategy and risk landscape, and the company's operating model?
4. Has the board considered how the organization's risk assessment capabilities are evolving, including how analytics, artificial intelligence and other emerging technologies can be used to review and validate data and information to unearth insights into enterprise risks and opportunities?
5. How has the company's cybersecurity risk management program evolved to address the current environment in which attackers are targeting a larger surface area and using increasingly unpredictable tactics? How are cybersecurity and data privacy considerations proactively integrated into all major strategy or tactical decisions, such as transactions, alliances, new products or services, and technology upgrades?
6. What types of data is the organization collecting from its customers and other stakeholders to better assess the trust, risks and opportunities related to changing preferences and needs? How is the collection occurring?
7. How is the company scanning and assessing geopolitical developments, including a rapidly changing trade and regulatory landscape and governments moving to a more interventionist policy position?
8. What is the company doing to address material social risks across its value chain, including the treatment of employees and suppliers' human rights practices and impacts on customers and the communities in which it operates?
9. How is the company assessing the impact of physical and transition climate risks on products and services, supply chains and operations that can materially affect operating costs and revenues across the enterprise?
10. Has the organization's tax planning strategy been reevaluated to address potential tax policy changes, as well as impacts arising from potential shifts in the supply chain and capitalization? Has the organization considered growing stakeholder interest in tax transparency and potential related reputational impacts?
11. Does the board understand and approve the company's data privacy and data usage policy? How is customer and employee data use managed? Are social surveillance algorithms reviewed for bias? Is data protection considered beyond cybersecurity protection?

Theme 3: Risk and resiliency - Risk management that enables resiliency amid new and evolving challenges

1. As the nature of work and employment further transforms, how will the organization adapt its talent functions to realize its strategy? Does the board spend the same amount of time with the chief human resources officer (CHRO) discussing data and metrics to assess the health and welfare of the workforce as it does with the CFO reviewing and assessing the overall financial health and stability?
2. To attract and retain talent in a hypercompetitive labor market, how is the organization implementing plans to address calls for better pay and benefits, including flexibility, the opportunity to work from anywhere, programs to enhance well-being, and funding for training and educational advancement?
3. How have the desired skills and behaviors for the organization's leaders evolved in response to the events of the last two years, and how has the board's succession planning and oversight of talent development changed in response?
4. Given that more than half of employees say they would leave their job if flexibility in their schedule and work location is not extended after the pandemic, has the organization considered how to make flexibility integral to the company's human capital strategy?
5. How is the company seizing strategic opportunities to tap into larger talent pools, diversify across numerous dimensions and expand working hours across time zones, while being mindful of work location, regulatory and legislative challenges?
6. Is the board comfortable with how the organization is nurturing its existing and future talent pools (e.g., reskilling and upskilling, educational alliances) to position the company to meet current requirements, address enterprise risks and prepare for continued strategic pivots?
7. How is company leadership enabling cross-functional collaboration and seeking input from a broader set of internal constituencies to support an inclusive culture, enhance engagement and spur innovation? How are these efforts measured?
8. Are there any efforts to identify and address disconnects between how management views the employee experience and the employee's actual experience? Are employee engagement scores, periodic pulse checks, summaries of exit and onboarding interviews, and social media data routinely reviewed?
9. With continued virtual work, how is the company addressing any impacts on employee engagement, inclusion and career development?
10. How is the company embedding diversity and inclusion into its workplace policies and human capital management programs throughout all steps in the employee life cycle to enable equitable opportunities, advancement and compensation?

Theme 4: Dynamic governance - Dynamic governance that addresses expanded and changing oversight requirements

1. How is the board adopting a continual learning mindset and strengthening its education program? Is the program sufficiently tailored to the company's and individual board member's needs, seeking diverse views from inside and outside the company that allow for challenges to status quo thinking?
2. How can the board's structure be refreshed to be more agile, future-focused and aligned to the risks and opportunities on the road ahead? Is the board considering the use of ad hoc committees made up of directors, management and third parties to address specific strategic issues?
3. How is the compensation committee evolving its charter to address oversight of broader human capital issues? How does the board hold senior management accountable for progress against related goals via incentive plans and other reward mechanisms? How is the company preparing for ongoing human capital disclosure requirements?
4. How is the company refreshing its investor engagement strategy to be more efficient and productive? Is it considering new engagement approaches (e.g., more collaborative engagement via working groups or investor days)? Is it leveraging the proxy statement and other disclosures as communication tools?
5. How is the board thinking like an activist in considering and proactively addressing the company's operating vulnerabilities? How is the board obtaining an unfiltered view of shareholder feedback on the company's strategy and pace of performance? Do select individual board members have direct dialogue with shareholders to understand their priorities?
6. Are information flows to the board being appropriately challenged to include more forward-looking and predictive insights, coverage of emerging risks, external perspectives, and corroborating data from third parties to keep pace with the evolving market, economic and geopolitical developments? Is a consent agenda used to maximize board discussion of strategic initiatives?
7. How is the board expanding its director search to maximize diversity and broaden board competencies in critical areas such as technology, human capital management, cybersecurity, and sustainability, and how are those individuals onboarded to set them up for success?
8. With increased board diversity, what changes to its protocols are being made to leverage diversity of thought, improve decision-making and create an inclusive boardroom?
9. Is the board prepared for increased accountability as ESG matters become a multi-stakeholder priority and investors increasingly embrace proxy votes against directors as their most effective tool to accelerate progress on ESG matters?
10. With growing scrutiny of sustainability reporting and stakeholder concerns around greenwashing, how is the board — particularly the audit committee — overseeing nonfinancial disclosures made in regulatory filings, sustainability reports, analyst calls and other mediums? Are internal or external assurance procedures applied to material assertions and data?
11. Is the company progressively reporting on human, customer and societal value to attract capital and meet the increasing demand of stakeholders for consistent and comparable ESG and other nonfinancial‑related data that aligns with evolving external frameworks?
12. What is the board's policy for timely review of corporate political and lobbying expenditures and any public political positions taken by senior executives? How is the board assessing the alignment of those expenditures and positions with the company's values, commitments and strategy?
13. Could the board create more effective meeting agendas and protocols (e.g., consent agendas) to increase director engagement on priority matters? Can virtual sessions augment and enhance traditional in-person meetings?

The report insightfully notes that companies will "continue to refresh their strategy to strengthen agility, resiliency and sustainability and leverage innovative opportunities that can accelerate their performance over the long term." Importantly, "Trajectories of companies that are thriving and leaning into this strategic reset are diverging rapidly from those that are merely surviving."

Moreover, "Boards have both the opportunity and the responsibility to help guide companies in this new era. They can support their companies in incorporating human and natural capital as part of business decisions and strategy, and harness risks as opportunities for innovation and a competitive advantage." I concur that this cannot "be achieved through a historical governance model. Boards should continue their own transformation to a new agile and dynamic form of governance and continuously challenge their composition, committee structure, agendas, and ways of working to position their organizations to thrive in the long term."

I appreciate how EY's report provides directors with insights and questions to consider as they engage with management on a variety of complex boardroom issues. What questions do you think directors should be asking to help companies in this new era?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

While Mobile Technology Offers Life-Changing Benefits, Research Shows Many Persons With Disabilities Remain Unconnected and Digitally Excluded

According to a fact sheet produced by the World Health Organization (WHO), one billion people, or 15 percent of the global population, live with some form of disability. And the number of people living with disability are dramatically increasing due to demographic trends and increases in chronic health conditions, among other causes. In consideration of this information provided by the WHO, it was with great interest to read a report produced by the GSM Association (GSMA), a UK-based organization that represents the interests of mobile operators worldwide, that says "Mobile devices and services offer life-changing benefits to persons with disabilities, such as enabling access to basic services and independent living. Despite this potential many persons with disabilities remain unconnected and digitally excluded. It is estimated that around 90 percent do not have adequate access to the assistive technologies (AT) they require. Mobile-based ATs, especially smartphones, could be a valuable and cost-effective tool for persons with disabilities."

The report presents key insights into the mobile disability gap. Presenting research from the following seven low- and middle-income countries (LMIC): Algeria, Bangladesh, Guatemala, India, Kenya, Nigeria, and Pakistan, GSMA's research "revealed that persons with disabilities are less likely to own a mobile, especially a smartphone, and are even less likely to use, or be aware of, mobile internet."

In explaining the research's methodology, the GSMA says "The Washington Group Short Set of Questions was used to identify persons with disabilities. Respondents who reported that they had 'a lot of difficulty' or 'cannot do at all' in at least one of the functional domains were considered a person with disabilities revealed that persons with disabilities."

Key findings of the report include:

1. "Persons with disabilities have lower levels of mobile ownership than non-disabled persons in all countries surveyed. Bangladesh has the widest gap, where persons with disabilities are 55 percent less likely to own a mobile phone than non-disabled persons, and the smallest gap is in Kenya and Pakistan at 11 percent.
2. "Despite the life-enhancing potential of smartphones as an assistive technology and a gateway to digital inclusion, persons with disabilities are significantly less likely to own a smartphone than non-disabled persons. The disability gap in smartphone ownership is wider than the gap in overall mobile ownership in most of the survey countries.
3. "There is a significant disability gap in mobile internet use. In each of the survey countries, persons with disabilities are significantly less likely to use mobile internet than non-disabled persons.
4. "Across all survey countries, fewer persons with disabilities are aware of the mobile internet than non-disabled persons. This is a significant barrier that prevents persons with disabilities from using and benefitting from mobile internet.
5. "In India and Pakistan, mobile users with disabilities who are aware of mobile internet but do not use it reported that a lack of literacy and skills is the main barrier to usage. Other major barriers include lack of perceived relevance, safety and security and affordability."

The GSMA correctly asserts that "Key stakeholders in the mobile industry have a critical role to play in closing the mobile disability gap and ensuring digital inclusion for all. This includes policymakers, international organizations, non-governmental organizations, organizations for persons with disabilities (OPDs), mobile operators and other ecosystem players, including start-ups and device manufacturers."

What is more, the report offers the following recommendations for stakeholders interested in eliminating the mobile disability gap:

• "Understand the mobile disability gap and how to reach and serve persons with disabilities better. Accurate and reliable disability-disaggregated data is a crucial tool for stakeholders to understand and address barriers to the digital inclusion of persons with disabilities. However, in most markets, disability-disaggregated data related to the access and use of mobile-enabled products and services is lacking, and has hampered digital inclusion efforts. It is critical that policymakers, the public and private sectors and digital players invest in, and collaborate on, accurate, ethical and effective data collection. This will help to monitor progress and inform the design of inclusive and relevant products, services and innovations for persons with disabilities.
• "Raise awareness of mobile internet and its benefits for persons with disabilities. Awareness of mobile internet is lower among persons with disabilities than non-disabled persons, limiting their potential usage of mobile internet. To raise awareness of the benefits of mobile internet and smartphones as an assistive technology, stakeholders can develop campaigns targeting persons with disabilities and explore partnerships with OPDs to reach persons with disabilities and showcase how mobile services are relevant to their lives.
• "Develop inclusive products and services that meet the diverse needs of persons with disabilities. Once persons with disabilities are aware of mobile internet and its benefits, it is important that they have access to relevant products and services that meet their needs. It is important that stakeholders ensure that existing products are accessible, and that new content, products and services are created with persons with disabilities in mind (e.g. user-centered design and inclusive or universal design practices) to improve accessibility and usability.
• "Build the digital skills of persons with disabilities. Many persons with disabilities are digitally excluded because they do not know how to use mobile and mobile internet in a way that meets their needs. Stakeholders can support the delivery of mobile digital skills programs that train persons with disabilities (and their caregivers/relatives) how to use mobile internet to meet their needs. They can also explore partnerships with OPDs or other relevant organizations to teach persons with disabilities how to access and use accessibility features and mobile-enabled products and services. Stakeholders can use resources such as the GSMA's Mobile Internet Skills Training Toolkit (MISTT) to train people how to access and use mobile internet services, including accessibility features. The toolkit is a visual, easy-to-follow guide that helps trainers demonstrate the functionality and value of the internet on internet-enabled mobile phones.
• "Ensure products and services are affordable for persons with disabilities. Smartphones, which typically provide the most accessibility features and drive substantially higher mobile internet use, are often unaffordable for persons with disabilities. Mobile operators can design solutions to make internet-enabled handsets more affordable to persons with disabilities, such as innovative financing models and 'data-light' accessible versions of mobile apps and services."

A more detailed set of recommendations for the mobile industry can be found in the GSMA's Principles for Driving the Digital Inclusion of Persons with Disabilities.

Do you agree with the recommendations for eliminating the mobile disability gap? What inclusive products and services are you developing to meet the diverse needs of persons with disabilities?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Six Ways a Board of Directors Can Ensure Future-Readiness

In response to my blog post about a report published by the EY Center for Board Matters listing six key areas corporate boards of directors should prioritize in 2021, a reader recommended that I review Is Your Board Future-Ready? The Expertise You'll Need, a report that presents six ways a company's board of directors can ensure future-readiness.

Produced by Nasdaq Governance Solutions, a business of Nasdaq, Inc., a global technology company serving the capital markets and other industries, the report notes: "The competitive landscape in nearly every sector is changing rapidly. You are likely looking for ways to remain relevant and drive your company's mission while making changes to reflect shifts in society. A future-ready board adds value by augmenting opportunity identification and maintaining its duties to investors and stakeholders."

The report also asserts that a "future-ready board is diverse, socially responsible, and tech savvy, understands inclusion, and demonstrates keen awareness of how to balance profit expectations with long-term stakeholder values. A future-ready director embraces efficient technology. As the age of many directors and CEOs increases, future-ready also means understanding the needs of the company during board and CEO succession planning. Particularly, long-term investors are holding boards and CEOs accountable for taking action with regard to increasing impact on society. A future-ready board is prepared for the task ahead."

Below are the six ways boards can ensure future-readiness:

1. Balance of Profit and Purpose: Whereas profit is essential, communicate how your company effectively engages key stakeholder goals.
2. More Gender and Racial Diversity: Consider the gender, race, experience, and skillsets of minority candidates to bring diverse and unique backgrounds to your board.
3. More Age Diversity: Add younger leaders who have a pulse on today's societal and economic shifts and offer new perspectives.
4. Expertise in Technology, Risk, and Security: Assign technology and risk oversight responsibilities and activities to one board committee.
5. Experience in ESG: Build ESG into your corporate strategy, given the focus of today’s investors and stakeholders on such issues.
6. More Diverse Backgrounds: Encourage forward-looking, ongoing board member education, including an onboarding program that brings new directors up to speed quickly.

While I strongly support each one of the report's recommendations, I particularly agree how the report addresses the need for board to address gender and racial diversity. "Investors and stakeholders are holding companies accountable if they don't have a board of directors that reflects gender and racial diversity," the report says. "In order to acquire the depth of perspective that best represents the modern customer base, more diverse faces and voices need to be present."

Crucially, "However, it must be done in a way that's relevant to your company's strategy—and overall board goals. Don't ask directors to join your board solely to 'check the diversity box.' Now more than ever, the general public is more aware of tokenism and performative allyship and they will call out your business for such actions. Formalizing the 'Rooney Rule' for your corporate governance guidelines will help ensure that your board considers at least one woman or minority candidate and have meaningful interviews with these parties whenever there is a vacancy."

For those unfamiliar with the Rooney Rule, an article by Sports Illustrated provides a good explanation about the origin of the policy from the National Football League (NFL):

Adopted in 2003, the Rooney Rule is an NFL league policy that requires teams to interview ethnic-minority candidates for head coaching jobs. Since then, the Rooney Rule has been expanded to include general manager jobs. A similar rule requires that a woman be interviewed for every business front-office position that opens in the league.

The policy is named after former Steelers owner Dan Rooney, who was credited with spearheading the effort. In 2002, Rooney was approached by groups concerned with the lack of coaching and front-office opportunities in the NFL.

Variations of the rule are now in place in other industries, including in the city of Pittsburgh. Facebook and Xerox have similar company policies.

I also appreciate how the report addresses the value of age diversity for boards. While in my late 20s, I had the opportunity of meeting a mentor who encouraged corporate leaders within his professional network to consider me as a qualified candidate to serve on their firm's board of directors. Unfortunately, they did not understand how my age and perspectives would provide value to their firm as a board member. As the report explains, "The average board member age is 63, and directors aged 50 and under filled only 6% of S&P 500 board seats. Age diversity in the board is a point of contention for companies, largely because boards look for candidates who have significant experience in leadership roles. This experience takes time to accumulate."

"However," the reports suggests that "younger board members may bring expertise in cybersecurity and cutting-edge technologies, helping companies uncover new opportunities, partnerships, and business models. Additionally, because younger board members are still professionally active, they have their fingers on the pulse of best practices, employee challenges, and changing consumer expectations. These younger leaders may help you adapt your culture to societal and economic shifts and broaden the board's overall perspective of where the industry is heading."

With respect to technology, risk and security, the report says:

Many companies are comprised of a technology element today. Directors are expected to meet a minimum technology understanding threshold. For example, the global average cost of a data breach is $3.92 million—a 12% increase since 2014.

Today, data security is everyone’s responsibility. A director duped by a phishing scam puts your company at monetary and reputational risk. Unfortunately, fewer than 40% of directors say the board fully understands the cybersecurity risks facing their company, while only 36% say the board has sufficient expertise in cybersecurity.

The board should support embedding security and risk mitigation into all areas of the company and recognize that they need to invest in ongoing improvement, especially as new collaborative technologies and processes are implemented.

The board should also consider specifying who oversees technology and cyber risk. Most S&P 100 companies (88%) have already charged at least one board-level committee with cybersecurity oversight, typically the audit committee (64%) or risk committee. Consider combining cybersecurity and risk expertise into one committee.

As for the recommendation of recruiting prospective board members with more diverse backgrounds, I agree that boards should "consider taking a more comprehensive approach to director assessment, focusing on skills and areas of expertise." Furthermore, "Determine if there are redundancies in board member experiences and identify what type of candidate will help fill the gaps in the board’s overall readiness. Look for candidates—other than former C-level executives—who have the insights and skills needed.

"While an understanding of financials is generally appropriate, expanding your range of candidates to those who are well-versed in other areas of business is beneficial."

Lastly, "In order to build a future-ready board," the report concludes that "it's important to conduct annual evaluations that provide metrics and insights into composition, functioning, and performance. With these insights, the board can take the right steps forward."

Do you have additional recommendations for how a board of directors can ensure future-readiness?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

EY's Six Priorities for Boards in 2021

Many will agree with this assertion: "Following a year of global upheaval, organizations are re-evaluating every aspect of their business." Produced by the EY Center for Board Matters, the report, which lists six priorities corporate boards of directors in 2021, further says "companies and boards will face an acceleration of existing challenges" in the coming year "and be compelled to address how they are building resilience and creating sustainable value in a rapidly changing business environment."

I have published posts about EY's recommended priorities for boards for previous years. Whether serving on a board of a company that is publicly-traded or privately-held, I appreciate that this year's report recommends that when evaluating a company's existing business model, the "strategy should be inclusive of investments in strategic competencies to meet material stakeholder needs and future expectations, including those related to environmental, social and governance (ESG) matters."

Not only did the business disruption caused by the coronavirus pandemic remind corporate leaders of the important role ESG has on a company's culture and relations with its investors and customers, but the events of past year serve as a reminder that a company's most valuable asset is its workforce. The report encouragingly notes: "Boards have an opportunity to help guide workforce strategy to create competitive advantage and long-term value, and this requires the right information. This involves making the chief human resources officer (CHRO) a central board resource, regularly reviewing well-defined and robust metrics for human capital and culture intelligence, and finding opportunities to bring the employee perspective into the boardroom."

Therefore, "With increased investor scrutiny and stakeholder considerations, boards will be well served to focus on the following priorities in 2021."

1. Overseeing strategy to create long-term value

"In today's stakeholder-focused business environment, it is imperative that companies define both financial and nonfinancial value drivers and include them in strategy-setting as they consider the needs of investors, employees, consumers, society and other key stakeholders," explains the report. "Longer-term assumptions within the strategy should be developed using internal and external sources of information on megatrends, investment flows by venture capital and private equity entities, along with monitoring merger and acquisition, alliance and joint venture activity. Traditional sector and adjacent construct analyses along with external risk intelligence can provide early indicators of emerging opportunities and risks."

In addition, "Management should integrate strategy and culture with the company's enterprise risk management process and provide the board with timely updates related to strategic opportunities and risks."

The report importantly proposes that "the board and management should collectively challenge whether they have the appropriate governance processes to enable the timely review and implementation of a robust strategy across the short-mid-, and long-term time horizons. A long-term value dashboard that includes metrics to gauge financial, human, consumer and societal value should be reviewed regularly by the board and monitored by management to ensure metric credibility. Board time should also be evaluated along with the potential use of a committee or an ad hoc committee given the need to continuously review strategic assumptions over a longer term."

Key actions for directors to take in 2021:

• Balance the board's oversight of strategy and investments over the short, medium and longer terms to sustain long-term value.
• Obtain an appropriate mix of internal and external data and information to validate key assumptions and determine strategic pivots.
• Integrate ESG opportunities and risks into strategy frameworks and decisions.
• As strategy shifts, evaluate that the culture has been redefined to incorporate new behaviors required to drive the strategy over the long term.
• Create a long-term value dashboard with regular briefings to the board to ensure shareholder value improvement manifests from a balanced focus on financial, human, consumer and societal value drivers.

2. Promoting enterprise resiliency in the face of uncertainty

"Board members are playing a pivotal role in helping management adapt their organizations to the world beyond the pandemic and overseeing how resiliency is built into all aspects of the business."

Key actions for directors to take in 2021:

• Set aside more time on board agendas to challenge assumptions, review contingency plans and verify that management is incorporating low-risk/high-impact scenarios into its ERM frameworks and strategy.
• Analyze megatrends and identify key management and external advisors to regularly report to the board on material business environment developments and data points to continuously improve oversight of strategy and risk.
• Turn emerging risks into strategic value by taking a balanced approach to risk management across the three dimensions of risk: downside, upside and outside, with a greater focus on upside and outside risks.
• Review key performance indicators developed by management to measure key risks and opportunities and assess the value of material intangible assets — such as human capital and culture.
• Re-evaluate risk oversight practices and related structures to assess whether board or committee oversight changes would enhance oversight.
• Review management's conclusions and effectiveness following postmortems regarding corporate responses to the pandemic, social justice movements and other material economic and business impacts in 2020.

3. Focusing on workforce transformation and new ways of working

"Historically, many boards limited their talent oversight responsibilities to C-suite succession planning and development. Today's leading boards recognize human capital as a key driver of long-term value."

Key actions for directors to take in 2021:

• Review the board's approach to overseeing strategic workforce issues, including how related committee responsibilities are allocated (e.g., succession planning, human capital initiatives).
• Make the CHRO a central and strategic resource to the board by aligning their participation to strategy, business and disclosure discussions.
• Regularly review a comprehensive set of workforce and culture-related metrics, understanding how they are being collected, measured and controlled.
• Align decision-making related to the human capital strategy with the company’s purpose, culture and values.
• Consider how the company's investments in reskilling workers or recruiting new employees are meeting current and future skills gaps and addressing innovation.
• Assess the quality and consistency of the company’s human capital disclosures across various communication outlets and challenge how to optimize the impact on the company's brand and reputation, including with prospective employees and other key stakeholders.

4. Leading on diversity, equity and inclusion

"Making real progress on diversity, equity and inclusion (DEI) will be one of the hallmarks of 2021 as leaders implement significant changes to their recruitment and management processes and boards hold their management teams and themselves accountable."

Key actions for directors to take in 2021:

• Work with management to define and determine how DEI can help drive value for the company.
• Challenge how DEI considerations are embedded in the company's human capital management programs throughout all steps in the employee life cycle.
• Understand how the company’s human capital management programs enable equitable opportunity, advancement and compensation.
• Consider how executive incentive pay could be more directly tied to the achievement of DEI goals.
• Assess how the board’s composition and director nomination process reflect the company's commitments to DEI.
• Include DEI metrics as part of the company's long-term value dashboard for credible reporting and updates to the board

5. Guiding an ESG strategy that drives stakeholder engagement and value

"A sustainable-investing surge is underway. Driven by many forces, such as investor demand and increasing recognition that ESG factors can be financially beneficial, record-setting inflows are going to companies deploying ESG investing strategies, and significant growth in ESG-branded funds points to continued momentum."

Key actions for directors to take in 2021:

• Capitalize on ESG investing and stewardship trends.
• Understand the ESG ecosystem and developments impacting stakeholder expectations.
• Guide ESG strategy development based on a materiality assessment and oversee the identification of ESG metrics and goal setting.
• Support the integration of ESG with broader strategy and ERM.
• Consider how the company tells its ESG story through various channels and confirm that messaging is consistent and data quality is validated.

6. Challenging board composition and effectiveness

"Throughout 2021, boards should continue to enhance their own effectiveness. Board competencies, practices and committee structure and responsibilities can be continually improved to meet ongoing and emerging challenges, including the impacts of COVID-19."

Key actions for directors to take in 2021:

• Confirm the board is receiving the information it needs from a variety of sources to keep pace with external developments and challenge status quo thinking.
• Assess the board's expertise and diversity against rapidly evolving strategic opportunities and risks and stakeholder expectations. Develop individual and collective learning opportunities to enable directors to stay on top of current trends and leading practices.
• Challenge whether board and committee meeting frequency, length, format and security remain fit for purpose in a continued virtual environment.
• Contemplate using a third party to provide objectivity and facilitate or improve the board evaluation process and actionable outcomes.
• Promote ongoing board evaluation beyond the formal annual process, such as making time for reflection on performance during board and committee meetings or quarterly executive sessions.
• Enhance communications to stakeholders to build confidence in a time of uncertainty.

While very few of us predicted that the world would experience anything like the coronavirus pandemic, which has gripped the global economy in 2020, the pandemic serves as one of many external risks that may impact a company's operations and financial performance. Crises like the current pandemic or the Great Recession that occurred between 2007 and 2009 provides an opportunity for boards to reevaluate how they run the companies they serve. I encourage directors to use EY's report as a tool to help boards serve their role prudently and effectively.

Do you agree with the six board priorities?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.