FTI Consulting and NYSE Governance Services Study Identifies Key Risks and Legal Trends for Companies in 2015
Annual Survey Finds IT/Cybersecurity as the Biggest Concern for Both Directors and General Counsel
IT and cyber risks pose some of the most dangerous, elusive and costly threats to companies. This year's study found that 90 percent of directors and 86 percent of general counsel indicated they are either extremely concerned or concerned about cyber risk. More than three fourths (77 percent) of both directors and general counsel believe that the cyber liability risk at their company has increased over the last two years. Nearly all (98 percent) of directors and general counsel indicated that they do not have a high level of confidence that their companies are totally secure and impervious to hackers nor are they entirely confident that their company could quickly detect a cyber-breach. However, 64 percent of directors and 77 percent of general counsel are at least somewhat confident their board knows the right questions to ask management about their company's cyber strategy, marking increased confidence from last year's survey.
"Cyber risk poses a potentially devastating effect on a business' reputation and bottom line," said
Shareholder engagement was also cited as a key concern for directors and general counsel. Thirty-six percent of directors stated that they were either extremely concerned or concerned about shareholder activism and litigation this year, while 43 percent of general counsel expressed the same levels of concern. Also reflecting a rise in shareholder activism and the push for additional disclosure and transparency, 62 percent of directors and 68 percent of general counsel communicated that their company has formal shareholder engagement protocols in place.
While both directors and general counsel acknowledged that operational and market risks have increased for their companies, they stated that M&A due diligence is an area they feel fairly confident in their team overseeing. A critical area for confidence given that when asked which key areas will likely require the most substantive time commitment in 2015, 51 percent of directors and 42 percent of general counsel chose M&A.
"We have noticed that many companies have had to adjust to the heightened M&A risks," said
Over the years, social media has been an emerging issue and continues to be a topic for debate in the boardroom. While a minority of directors (30 percent) and general counsel (35 percent) do not feel that social media poses any risks against their company, 91 percent of directors stated that their board does not have a thorough understanding of the risks related to social media for their company and 79 percent of general counsel stated that their legal department does not have a thorough understanding of the risks related to social media for their company.
"From cybersecurity to an increasingly complex regulatory landscape, the list of risks that keep directors and general counsel up at night is not getting any shorter," said
About the Law in the Boardroom Study
The annual Law in the Boardroom Study, designed by
The full report can be accessed here: http://www.fticonsulting.com/global2/critical-thinking/reports/law-in-the-boardroom-in-2015.aspx
About NYSE Governance Services
NYSE Governance Services is an integrated suite of resources for public and privately held companies worldwide seeking to create a leadership advantage through corporate governance, risk, ethics, and compliance practices. NYSE Governance Services leverages the expertise of Corpedia®, a leader in risk assessment and e-learning for ethics and compliance, and Corporate Board Member®, a trusted source on governance matters for company directors and C-level executives-both
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