The success of a company is dependent on the quality of the board. In order for the board to provide the level of oversight and strategic direction needed, directors need to stay sharp – they need to have competencies in a wide range of issues. Therefore, board directors and governance professionals should follow best practices for board education to ensure that they are continually developing.
Board development can cover a wide range of topics, varying based on individual director competencies and the industry in which the organization operates. NACD (the National Association of Corporate Directors) provides a good basic framework to help organizations develop a comprehensive board education and development program. They recommend providing board education in the following areas:
- Board governance basics – board and committee structure, roles and responsibilities, director liabilities, boardroom procedures
- Board areas of focus and oversight – financial, talent, executive succession, strategy, risk
- Shareholders and stakeholders – shareholder and stakeholder engagement, stewardship
- Trends and emerging issues – “seeing around corners”
As the scope of board responsibilities expand, board education for cyber risk and other topics becomes even more critical. One area in which many directors are challenged to stay current is cyber risk. The cybersecurity threat landscape is always evolving, and the board is charged with ensuring the organization has strong cyber risk mitigation programs in place. Depending on the industry, an organization should ensure formal board development and board education on cyber risk takes place at least annually.
Meanwhile, directors themselves must take an active role in ongoing board education and development. Directors are expected to stay current on a broad range of emerging issues, areas of risk, potential opportunities, corporate culture and reputation, and future planning. New tools exist that can assist governance professionals to ensure directors receive adequate access to high quality sources of board education and insights.
Modern governance requires directors to have access to the right tools, insights, and practices to ensure good governance. A key part of modern governance is ensuring adequate board education and development – which must be ongoing.
Today’s top boards are taking a proactive stance on board education and development. As corporate director Betsy Atkins mentioned in the book, Governance in the Digital Age: A Guide for the Modern Corporate Board Director, “Boards that take competition seriously in the digital age will stay the most effective and vibrant. And board members who embrace the rate of change and make the effort to self-educate will be the most valuable.”
Additionally, new tools exist that have been purpose-built to help educate directors on relevant topics, and provide directors insights into areas of risk, board effectiveness, board composition and potential new director candidates, and other insights. Boards that implement modern governance practices are now leveraging tools like these to gain a competitive advantage and take their board education to the next level.