More and more directors and senior business leaders are deeming business-critical issues as being “of material concern” compared to this time last year, new research shows.
Global law firm King & Wood Mallesons has released its “Directions: the pandemic pulse-check” survey, which sought and received responses from 195 Australian directors and senior business leaders about their levels of confidence in their organisations to navigate the challenges raised by the COVID-19 crisis.
The key takeaway from the survey, KWM, said, is that – across the board – there have been “increases in the proportion of respondents deeming key issues as ‘of material concern’ for their boards compared with our pulse-check which was conducted in late 2019”.
The most commonly held concern for such professionals is maintaining an appropriate corporate culture and managing IT and cyber risks, with 60.8 per cent of respondents seeing this is as a concern (up from 48 per cent and 44 per cent respectively last year).
“No doubt this reflects the increasing reliance on digital operating models, and the risks associated with them,” said survey co-author and KWM M&A partner Meredith Paynter.
There is also, the firm continued, substantially more concern this year about a lack of government vision and courage to tackle necessary reform (36 per cent compared to 22.6 per cent in 2019), excessive regulation and red tape (35.4 per cent compared to 28 per cent last year) and there is a more prominent perception that government decisions are overly influenced by populist politics (27 per cent this year in contrast to 18.3 per cent in 2019).
Elsewhere, the risk of class action litigation is seen as a concern for more directors and senior business leaders in 2020 (12.2 per cent compared to 8.5 per cent last year), and correspondingly, more are worried about the risk of regulatory investigation and/or enforcement action (16.4 per cent compared to 15.2 per cent).
“It is not surprising boards want reform in that area to address the ballooning costs and class action environment,” KWM partner Rhys Casey commented.
More than half of respondents (56 per cent) rated their organisations as well or very well prepared for the pandemic’s impact. Looking forward, 89 per cent of respondents rated their organisations as well or very well prepared in terms of positioning for the post-pandemic “new normal”.
However, as KWM pointed out, said respondents are also expressing heightened concern for how their organisations will flourish in the new normal.
When it comes to protecting brand and reputation, almost half (49.2 per cent) are concerned compared to 42.7 per cent last year. Promoting innovation in the organisation is a much bigger concern this year compared to last (48.1 per cent and 31.1 per cent respectively), and protecting information is a concern for more than one-third (35.4 per cent) compared to one-quarter (25 per cent) last year.
“The pandemic has brought corporate Australia screaming into the 21st century,” said Mr Casey, commenting on the uptake of electronic document execution. Most (56.9 per cent) respondents support that change being made permanent, while 40 per cent also backed continuing virtual and hybrid shareholder meetings, he outlined.
Finally, boards are increasingly concerned about environmental issues, KWM detailed.
On the question of energy policy, 27.5 per cent of respondents are worried compared to 23.2 per cent last year, and more notably, 30.2 per cent expressed concern about ESG issues including climate risks in contrast to 22 per cent last year.