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FT-ICSA survey finds boards are failing to take cyber risk seriously

01 July 2013

Only one fifth of company boardrooms have successfully taken action to mitigate their cyber risk exposure, according to the third Boardroom Bellwether, released today by the Institute of Chartered Secretaries and Administrators (ICSA) and the Financial Times (FT) and which is available for download at the end of this article.

Survey results reveal that, while practically every company concedes the risk from cybercrime is increasing, nearly 80% of respondents admitted their board had not actively discussed, or seen, the UK Government’s guidance on tackling cybercrim[1]. The FT-ICSA Boardroom Bellwether canvasses the views of FTSE350 company secretaries twice a year on a range of business issues to gauge the sentiment in UK boardrooms.

Seamus Gillen, director of policy at ICSA, said: ‘The survey seeks to understand how boards are positioning themselves in relation to key business issues. These results demonstrate the degree to which boards continue to underestimate the dangers posed by cyber risk. Cybercrime has the potential to destroy significant amounts of value, as well as the company’s reputation.’

Alison Smith, chief corporate correspondent at the FT, said: ‘This survey is important for our understanding of the corporate thinking in the UK boardroom. Issues such as cyber crime, the pressures of quarterly reporting, and the role of proxy advisors are among the particular challenges facing FTSE350 companies this year, while gender diversity at the board level is a continuing concern.’

The survey also highlights companies concerns over recruiting board level candidates who are of sufficient calibre. It is suggested that the shortage of board-ready women may be a contributory factor in allowing companies to recruit sufficiently skilled candidates to the board. Since the last FT-ICSA survey in December 2012, participants acknowledge a higher degree of gender diversity in the boardroom. However, when questioned if they expect their company to meet Lord Davies’ target of 25% for female representation on boards by 2015[2], the outcome remains gloomy with only a third who believe the target can be achieved.

‘The results of the survey bring home the scale of some of the business challenges boards are facing. Board effectiveness is critical if companies are to succeed, and for that we need high-quality directors able to deliver business results while tackling a host of other issues’ Gillen said.

Other findings of note from the survey are as follows:

  • In comparison to data generated from the two previous FT-ICSA surveys, there has been a striking improvement perceived in global and UK economic conditions – up from a mean score of 3.04 and 2.87 respectively a year ago, to 3.51 and 3.43 now. The results show that the highest levels of intended company growth lie in Asia Pacific, followed by Brazil and China. Continental Europe still remains the lowest priority region for intended growth.
  • Over 50% of participants identify tax simplification as the main area in need of government regulatory reform, reflecting businesses’ wish for a tax regime which is fair and transparent, allowing companies to make profit without being exposed to the risk of public censure
  • 53% of boards said they want to see an end to quarterly reporting, reflecting the emphasis in the Kay Review[3] on policy initiatives to encourage and support long-term thinking.

[1] ICSA Guidance Note on Cyber Risk  (June 2013) 

[2] Women on Boards by Lord Davies of Abersoch (February 2011) 

[3] The Kay Review of UK Equity Markets and Long-term Decision Making (July 2012)