20 December 2018
Our community looks at their boards’ relationships with technology
With technology and data being big news and companies being required to keep up with the latest developments, we asked the Governance and Compliance and Core communities for their insights into their boards’ relationships with technology.
The headline figure shows that only half of our respondents believe that their board fully understands the challenges and opportunities that tech and data provides. Data appears to be more clearly understood than technology with one responder stating that: ‘Challenges arising from data management are more readily understood (e.g. the impact of poor data quality), but the real opportunities available to the organisation through the effective use of data are less well considered – especially through the lens of commercial strategy.’
The fast-moving nature of technology means that some responders see it as near impossible to ‘fully understand’ with one person stating that: ‘This has been high on the agenda and I think their understanding is pretty good – but not sure about full understanding’ and another saying: ‘They have a good understanding and have received a number of presentations in this area. However, the opportunities are moving rapidly. I would therefore find it difficult to say they fully understand the position’ and another ‘The speed at which technological advances are at pace means key aspects of the technology journey may not be provided in a timely manner.’
There is also some suggestion that the board set-up makes it difficult. One responder stated that ‘Technology updates are provided but given the quarterly cycle of meetings there’s no guarantee that up to date information is cascaded to the board’ and another ‘Most boards are made up of people who are of a generation that do not really understand the possibilities and threats offered by technology.’
When asked if there were particular areas that boards needed to improve their knowledge of, responders were given the choice of using data effectively, GDPR, cyber security, IT and governance, AI and automation or all of the above. It was quite clear that the main area for concern, with a quarter of respondents picking it, was AI and automation, but worrying nearly the same amount (23%) felt that their board needs to improve their knowledge in all areas.
What do you think is the main barrier that prevents boards from engaging properly with technology at a strategic level?
One responder stated that: ‘There has been a focus on GDPR and cyber security but that focuses on risks rather than opportunities. Technology is both an opportunity and a threat – boards need to understand how it impacts the business both operationally and strategically’ another concurred stating ‘Regulator driven governance requirements have been the historic focus of our board, so these are well understood. Exploiting data in a forward looking way (and building on the good work done as part of GDPR etc.) is the next challenge and one that isn’t yet top of the mind at all levels.’
When asked for the reasons behind this lack of engagement over half of all respondents (58%) felt that the culprit was a lack of knowledge. One responder stated that ‘Most boards are of a generation that are not digital natives and so understanding new terminology can be a challenge, such as Blockchain for example, but also the pace of change is such that new technology is emerging quicker than in the last 40 years.’ And another ‘In a regulated financial services company, the volume of change is significant and, as a listed company, the board has also to contend with developments in corporate governance. It is becoming increasingly difficult for non-executive directors to maintain an adequate level of knowledge across the full spectrum of legal, regulatory, governance and data privacy interests.’
The solutions to these issues was varied with one thinking the answer is ‘allocating responsibility for monitoring IT and data security to the Audit and Risk Committee might be one way’ and another ‘I think it depends upon the sector. An IT specialist on the board may be suitable for some companies, others may want to diversify the board to include younger people.’
If you are a company secretary or governance professional at a leading UK business, and you would like to take part in or comment on future surveys, email email@example.com