Annual Survey Cites Data Security and Operational Risks as Top
Concerns for Directors and General Counsel
Escalating risk surrounding cyber security and IT strategy, operations
and corporate reputation are top concerns for U.S. directors and general
counsel as revealed in the 12th annual Law and the Boardroom
Study by Corporate Board Member, an NYSE Euronext company, and FTI
Consulting, Inc. (NYSE: FCN). Accordingly, the findings reflect changes,
such as globalization of U.S. businesses and increased online
communications and delivery channels, taking place in corporate America.
The survey also suggests that proposed rule changes regarding
shareholders’ access to the proxy have contributed to the rise in
concern over proxy access, private ordering and the manner in which
companies manage their communications with shareholders.
With regard to the areas respondents find most challenging, it comes as
no surprise that this year, more than half (55%) of general counsel rate
data security as a major concern and 48% of directors feel likewise.
Interestingly, this level of concern has nearly doubled in the last four
years: In 2008, only 25% of directors and 23% of general counsel noted
data security as a high area of concern.
“I hate to say this, but I think it is going to take several
well-publicized security breaches before a majority of corporate boards
finally embrace the fact that doing business today without a prudent
crisis plan in place is a formula for disaster,” said TK Kerstetter,
President, Corporate Board Member. “While a number of companies are
taking steps to become more educated on IT risks, the fact is that not
enough are taking the appropriate actions to fully prepare their
organization.”
Concern about operational risk garnered the second-highest percentage of
responses from both directors (40%) and general counsel (47%), while
corporate reputation risk earned the third-highest prevalence of
responses by directors (40%) and the fourth highest by general counsel
(35%). Furthermore, an analysis of historical Law and the Boardroom data
shows this level of concern has increased compared with 2007 results,
when only 18% of directors and 25% of general counsel indicated concern
about loss of reputation.
“Boards increasingly are concerned about operational risk in the context
of emerging markets, where rising economic prosperity offers
opportunities to expand operations and grow market share yet also poses
heightened governance risk,” said Neal Hochberg, Senior Managing
Director and Global Leader of the FTI Consulting Forensic and Litigation
Consulting practice. “To make informed decisions about these market
opportunities, corporations increasingly are conducting proactive market
risk assessments that identify and prioritize the risks that first need
to be evaluated.”
Looking ahead, directors were asked what type of information their board
most needs to be as effective as possible in 2012. The five areas
receiving the largest percentages of director responses were strategic
planning (88%), executive compensation plans (48%), board/ management
relations (41%), enterprise risk management (36%) and investor relations
(33%).
For additional findings or to download a PDF version of the complete
report on the Corporate Board Member/FTI Consulting 2012 Law and the
Boardroom Study, please visit https://www.boardmember.com/legalrisks/
or http://www.fticonsulting.com/global2/critical-thinking/reports/legal-risks-on-the-radar.aspx
About Corporate Board Member
Corporate Board Member, an NYSE Euronext company, is the leading
information and education resource for senior officers and directors of
publicly traded corporations, large private companies and Global 1000
firms. The quarterly publication, Corporate Board Member magazine,
provides readers with decision-making tools to deal with the strategic
and corporate governance challenges confronting their boards. Corporate
Board Member further extends its governance leadership through an online
resource center, conferences, roundtables and timely research. The
magazine maintains the most comprehensive, up-to-date database of
directors and officers serving on boards of publicly traded companies
listed with the NYSE Euronext and The NASDAQ OMX Group, Inc. stock
exchanges. www.boardmember.com
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to
helping organizations protect and enhance enterprise value in an
increasingly complex legal, regulatory and economic environment. With
more than 3,800 employees located in 24 countries, FTI Consulting
professionals work closely with clients to anticipate, illuminate and
overcome complex business challenges in areas such as investigations,
litigation, mergers and acquisitions, regulatory issues, reputation
management, strategic communications and restructuring. The company
generated $1.56 billion in revenues during fiscal year 2011. More
information can be found at www.fticonsulting.com.
