Governance professionals share insights about how their boards oversee geopolitical and economic risks and the issues of interest to both directors and investors
Risk oversight is one of the core responsibilities of a corporate board of directors. Geopolitical and economic risks involve a growing array of issues in an increasingly entangled world where developments at home and overseas can impact companies’ current fortunes and future prospects.
Among these risks are developments such as war and economic instability. Increasingly, they can also include political and social matters.
Effective oversight of geopolitical and economic risk entails committee assignments, main board-level discussions, identifying the key issues to address and keeping investors and others informed, where necessary.
In this special report we present the results of a survey conducted among governance professionals such as general counsel, corporate secretaries and their teams. Their responses offer a useful window into what goes on inside boards in terms of geopolitical and economic risk oversight and where there can be touchpoints with the outside world. We look at areas such as which elements of the board are charged with oversight, which topics boards are discussing, what issues investors are asking about and whether directors are involved in engagement around those, among other things.
Just over half (54 percent) of respondents say their main board has primary oversight of relevant geopolitical risk issues. The other panels mentioned with significant frequency are the risk committee (named by 17 percent of respondents) and the audit committee (15 percent of respondents).
More than four in 10 respondents (42 percent) say the body with primary oversight of geopolitical risk issues reports on those to the main board at every board meeting.
Overall, almost three quarters of respondents report a slight (53 percent) or large (20 percent) increase over the past two years in the frequency of board discussions on geopolitical issues.
The most frequently mentioned economic/geopolitical topic boards have discussed over the past year is economic growth/recession, cited by 95 percent of respondents. That is followed by inflation (93 percent of respondents), the war in Ukraine (84 percent), racial equality (46 percent) and gender pay gaps (43 percent).
Half of respondents at mega-cap companies say board members are either frequently or always engaged with investors when relevant economic issues are discussed.
Just over a quarter (26 percent) of all respondents wish for improvements in the way their board oversees economic or domestic/global political risks.
Survey demographics
This report is based on the findings from an online survey conducted between August and September 2022.
