In-house teams must be prepared for economic headwinds this year
Our national economy remains sluggish and, as a result, global uncertainty is shaping up as a primary challenge for Australian businesses and their legal departments, argues Diligent.
In a recently published white paper, musing about the year ahead for corporate governance, governance business Diligent reflected that the new decade brings with it new challenges for legal departments, directors and company secretaries.
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On the question of economic headwinds, Diligent posited that mounting external pressures are confronting a wide range of organisations.
“Australia’s economy continues to be sluggish, with interest rates at record lows, high levels of household debt, and inflation remaining below target,” it wrote.
“Directors are keenly aware of the growing risk, with global economic uncertainty ranking as the top economic challenge facing Australian businesses.”
Economic sentiment among directors has declined, Diligent continued, with net negative expectations for the Australian, Asian, European and US economies, according to the Australian Institute of Company Directors’ most recent Director Sentiment Index.
“However, despite those concerns, a significant proportion (43 per cent) of directors expect their own organisation will expand in the next year,” it wrote.
“The fact that a generation of Australians has never experienced a recession goes some way to accounting for this optimism.
“This is coupled with a major lack of international experience on Australian boards.”
Moreover, geopolitical change will have an influence upon those predicted headwinds, Diligent continued.
“The world will be watching as the US prepares for its next presidential election, scheduled for 3 November. Its outcome will influence economic relationships around the world and whether the current trend towards greater nationalism is likely to continue,” it wrote.
In the same white paper, Diligent argued that businesses have to ensure they are doing more than just the bare minimum in order to meet public expectations moving forward.