With 2016 upon us, boards are likely to reflect on the
organizational challenges they expect to face in the coming year,
and to develop effective strategies to tackle these challenges. A
recent EY publication anticipates that in developing
these strategies, boards will focus their energies on addressing
the following five critical challenges:
1. Board effectiveness, composition and refreshment
Boards are always looking for ways to self-improve. It is
expected that 2016 will be no different in this respect. Boards
will seek ways to attain the right mix of skills and experience and
to enhance transparency and accountability. Particular attention
will be paid to achieving board composition reflecting a greater
diversity of knowledge and experience to mirror the increasing
convergence of sectors and rising global interconnectivity.
Demographic changes should give boards pause for thought on
establishing an effective succession planning strategy. Among
Fortune 500 companies with retirement-age policies, 19% of
directorships are held by individuals within 5 years of reaching
the board's designated retirement age.
2. Investor and stakeholder engagement
The recent rise in investor activism has caused boards to
reflect on their shareholder communication strategies. Boards are
increasingly monitoring required filings to ensure they serve as
effective communication tools rather than merely
"compliance" documents. Designated directors are expected
to be fully prepared to engage directly with investors on
appropriate governance matters.
At the moment, only 7% of organizations claim to have a robust
incident response program that includes third parties and law
enforcement and is integrated with their broader threat and
vulnerability management function. This percentage is shockingly
low given the serious risk that a cyber-breach poses. It will be
incumbent on boards to ensure critical infrastructure is adequately
protected and that there is a system in place to respond to a
crisis. Boards will have to familiarize themselves with
organizational vulnerabilities so that they can both guide
management's cybersecurity strategy and prepare to face of new
4. Oversight of Enterprise Risk Management (ERM)
In an effort to create long-term value, it is expected that
boards will develop new policies and procedures to improve upon
current ERM strategies and to enhance their organization's risk
5. Oversight of talent risk management
In conversations with board directors, three out of four
directors claimed that human capital strategy, meaning the need to
retain or acquire talent, will be one of the top emerging risks
boards face in 2016. To mitigate this risk, it is anticipated
boards will work more closely with management to ensure an
appropriate human capital strategy is in place. In order to best
fulfill this role, boards will be required to apprise themselves of
any and all human capital vulnerabilities particular to their
The author would like to thank Michael Viner, articling
student, for his assistance in preparing this legal
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
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