IoD Marks Complex Risks to Boards, Warns of Compliance Mindset

The Institute of Directors’ (IoD) Centre for Corporate Governance has identified the biggest challenges facing companies over the next five to ten years, warning that UK-based firms will be increasingly exposed to more complex risks. In particular, the cumulative impact of ESG-related challenges, alongside increasing governance-focused pressure from policymakers, regulators, and investors, means boards are in danger of being caught on the back foot, the report said, with some board members feeling no longer in control of their organisations. The IoD has urged boards to re-establish their leadership role and engage more effectively with stakeholders on systemic issues. It called for a debate on the policy framework for governance, ensuring a clearer delineation of decision-making responsibility between boards, regulators and stakeholders. Dr Roger Barker, Director of Policy and Governance at the IoD, said: “Before moving ahead with any reforms, it is important for regulators to consider the cumulative impact of regulation on the ability of boards to apply their own judgement. If excessively constrained by regulation, board members will increasingly perceive their role in terms of compliance. They will contribute less to corporate performance and strategy. Over time, this will inhibit the capacity of UK business to innovate and compete.”

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