Boards of directors know they need to help management drive the application of disruptive technology, and to be able to deal with the ensuing implications.
Are boards up to it? A report from Ernst & Young and Corporate Board Member suggests directors themselves don’t believe they are ready.
Digital and emerging technologies continue to disrupt existing business models and operations, offering the tantalizing prospect of increased innovation, new services and products, and a means to tap new markets and boost efficiency, among other benefits.
Disruptive technology comes with a number of risks, often unexpected or inadvertent, that include ethical concerns and failures.
Smart boards recognize taking a hands-on approach to ethical and compliance dilemmas is of utmost importance, as safeguarding a company’s reputation can be tied directly to performance, and its bottom line.
The study shows how board members believe they are a bit behind the curve when it comes to disruptive technology. In a survey of 365 corporate directors, nearly half didn’t think their boards have appropriate resources to navigate tech disruption. Fewer than half said they feel “very attuned” to potential disruption in their organization and industry.
Boards recognize they can help organizations mitigate risks brought on by disruptive technology by including the topic on the full board agenda, and by incorporating it into enterprise risk management. Some 29% of directors said they discuss emerging technologies regularly at board meetings, while the remainder discuss it annually or on an ad-hoc basis.
This leaves most directors uncertain as to whether the board is investing enough time to discuss emerging technologies to properly assess risks.
A majority of directors said they feel boards can enhance their oversight of disruptive technologies through tailored board training and education, the survey found. Hopefully, these steps will lead them to address the ethical and moral complexities presented by disruptive technology.
All of this underscores the need for boards to take a step back and verify whether they have the necessary portfolio of skills and competencies to serve as a strategic resource and guidepost for the organization.