Corporate governance of today is changing so rapidly that if you blink, you’ll miss the change, which is why the impact of a governance deficit can be a giant detriment to your organization. Events in the corporate world are occurring in real time. Missing even one critical update could mean passing on an important opportunity. What’s worse is that not being acutely in tune with the latest on Wall Street could mean failing to detect a major risk at the earliest possible time.
The reality is that while the pace has picked up substantially in the marketplace, governance technology has lagged far behind it. Technology has the potential to move companies into the future at a faster pace than what it’s been doing — up until Diligent Corporation developed the concept of modern governance.
A host of issues are hitting boardrooms all at once — threats, demands, unanticipated changes are pummeling board directors so quickly that it’s forcing them to digest an immense quantity of complex information in short periods. More than ever before, there’s an increased focus around transparency, accountability and doing the right thing. A day in the life of a board director can be summed up in one word — overwhelming. There simply aren’t enough hours in the day to fill the governance deficit responsibly.
What Is a Governance Deficit?
A company or organization that has a governance deficit lacks the security, foresight and accountability to deal with the blitz of contemporary challenges that just keep coming. Activist investors, cyber risk, increased regulations, diversity and global uncertainty are just a few of the major issues that board directors can expect to face in today’s business world.
According to new insights from Diligent Institute, governance deficits across over 12 public companies have cost shareholders more than $490 billion in value in the year following the financial crisis. At the same time, good governance has equipped companies to surpass their peers by 15%.
Today’s boards need accessible data to help alleviate the governance deficit. In many cases, data is available, but it’s not quickly accessible.
Companies store data in disparate systems where it doesn’t get updated or shared with other systems or users. Board directors spend too much time looking for documents and information. When they can’t find it in a timely manner, it’s of no use. Board directors have the cumbersome task of trying to make sense of it and update it. They don’t get notifications about updating information and it quickly becomes obsolete.
Modern Governance Protects Better Against Risk
Modern governance requires protecting board business from risk. In the haste to respond quickly to corporate needs, board directors may resort to using non-secure file-sharing apps, personal email accounts or business email accounts, perhaps thinking that there’s little risk to security — just this once. The reality is that it takes just one opportunity for a cybercriminal to hack into an email or a non-secure file-sharing app to put all a company’s information at risk. Without a secure board management software system like Diligent Boards and Governance Cloud, board directors are at risk of sharing highly sensitive data haphazardly, and virtually anyone in the world can access board materials.
A Modern Governance Approach Gives Directors the Right Information at the Right Time
A governance deficit means that board directors don’t have the right information at the right time. That means that they can’t get the answers they need because they’re not asking the right questions. The lack of timely information puts board directors at a strong competitive disadvantage and increases the chance of a serious risk like cybercrime, data leaks or regulatory mishaps. These issues lead to lost value for investors, employees and society in general. Sudden and unexpected crises exacerbate and compound existing problems for CEOs and leadership teams.
What Is a Modern Governance Approach?
Modern governance brings corporate governance into the digital age. What is it exactly?
Modern governance is the practice of empowering leaders with technology, insights and processes to result in good governance. Companies need to practice good governance because it’s required for them to not just survive in today’s volatile market, but also to thrive and to be sustainable.
Companies that embrace a modern approach to governance don’t take risks with sensitive data. They use processes, systems and digital tools that ensure that sensitive data and all board and manager communications are secure. A secure board management software system by Diligent Corporation ensures that board directors have information that is up to date and accessible when they need it, no matter what time of day or where they happen to be. Diligent Boards allows directors to access documents that are stored securely in the cloud using their laptop computers, mobile phones or electronic tablets.
Board Management Software Can Prevent Governance Deficits
Boards can easily set up the platform with granular permissions so that they have full control over who sees what and have the ability to increase or decrease access within minutes when the need arises. The program has unlimited capacity for document storage. Each document is categorized and filed for convenient and easy retrieval. Boards can upload documents to the system and make them available within seconds. There’s no backlog of paper sitting on someone’s desk ready to be filed or scanned.
Modern governance means that board directors and managers will be able to spot risks more quickly and identify opportunities to outperform the competition. Essentially, modern governance allows board directors to keep a constant watch on the industry and be valuable consultants to senior executives. Diligent Boards supports modern governance because it provides a centralized, secure electronic location for critical data. A secure board management software program is essential for protecting an organization’s most valuable information while enabling secure communication and collaboration among corporate leaders. The end result is that the organization will be nimbler and more ethical in their responses.
Diligent is the pioneer in modern governance and serves the largest global network of corporate directors and executives. It makes sense to put your trust in an innovative industry leader.