Sonita Lontoh quoted by Fortune for Diligent’s Modern Board on AI Risks and Opportunities

How to plan for another VUCA year in corporate governance

By Matt O’Grady
January 8, 2025

Last year was a dynamic one for corporate governance, with big changes in everything from the regulatory environment to the geopolitical realm. For those trying to figure out corporate strategies for 2025, the operative acronym continues to be VUCA: volatility, uncertainty, complexity, and ambiguity.

“We used to think of creating strategy in three- to five-year cycles, but most directors will tell you that’s absolutely not fit for purpose anymore,” says Dottie Schindlinger, executive director of the Diligent Institute (a sponsor of this newsletter).

Directors increasingly want strategies delivered in a more iterative fashion, with dashboard reporting for 90-day, 60-day, or even 30-day cycles. “It’s the difference between MapQuest, which gave you a printed set of directions to follow, and Google Maps, which in real time tells you what’s happening with traffic, how expensive gas is, and where to get a sandwich.”

The problem is that management is not delivering the kind of dynamic reporting needed by boards, according to Diligent’s soon-to-be-released What Directors Think 2025 report. When asked what areas they are finding hardest to oversee, directors place “strategy” at the top of the list.

“It’s not that directors have a hard time creating or approving strategy,” says Schindlinger. “It’s that they’re frustrated they don’t have better visibility on how the strategy is going.”

The global perspective

So what else is on the board agenda in 2025? Modern Board reached out to six of our favorite global experts to get their take on the year ahead in corporate governance:

● According to Greg Robinson, founder and managing partner of Blenheim Partners in Sydney, one of the imperatives for Australian companies will be getting more operating experience on their board. “Organizations are under pressure to step up productivity, increase performance, and achieve greater returns. Stakeholders are demanding it.”

● Better dashboard reporting was a theme echoed by Kelly Blair, the Toronto-based managing partner of Caldwell Partners. She says boards “need to be vigilant in overseeing technology implementation and upgrades to avoid breaches or disruptions,” adding, “AI has increased organizations’ attack surfaces and the high cost of insurance.”

● Of course, AI has many positives too, notes Sonita Lontoh, an independent board director at Sunrun and TrueBlue. To capitalize on the opportunities, she says boards need to ensure their company’s AI ambition is well-defined, “including how much risk appetite they have, how much money and resources they’re willing to invest, and how integral AI is to their business strategy.”

● Overall, boards need to get better at identifying, managing, and mitigating risks in 2025, says Ana Dutra, an independent director at Pembina Pipeline. “With so much geopolitical, economic, climate, and social change happening worldwide, the impact on supply chain, inflation, and workforce migration will be huge and unpredictable.”

● And expect more pressure on CEO succession planning, says Greg Lau, head of the board advisory practice at RSR Partners. “Tenures are getting shorter—and independent chairs, and senior directors as committee chairs, must focus time in executive sessions on reviewing talent inside and outside the company.”