Cybersecurity attack is the greatest threat to markets in 2018 but company directors should also be focusing on corporate social responsibility (CSR), boardroom diversity and shareholder activism, according to an international law firm, which has published its list of the top 10 topics for company directors in 2018. Akin Gump Strauss Hauer & Feld (Akin Gump) has offices in the US, Europe, Asia and the Middle East and outlined where it thinks corporate directors should be focusing their attention this year:
It's essential that companies are prepared on the cybersecurity front in 2018 as the risk of breaches will continue to rise. Akin Gump stated: “No crisis should go to waste. Boards should learn from others’ misfortunes and focus on governance, crisis management and recommended best practices relating to cyber issues.”
2. Corporate social responsibility
CSR is a way for companies to increase their value to all stakeholders-investors, shareholders, employees and consumers, according to the law firm. It wrote: “Boards should invest in CSR programming as an integral element of company risk assessment and compliance programs, and should advocate public reporting of CSR initiatives.”
3. Managing five generations of employees
Companies need to prepare for generational diversity by better understanding employee expectations, encouraging cross-generation mentorship, and setting an example of generational diversity with respect to company leadership and members of the board.
4. Corporate strategy
The law firm writes that boards should “expect to face conflicting pressures, since shareholders will expect companies to invest in both long-term growth opportunities and short-term stock enhancement measures, including the deployment of excess cash for stock buybacks. Cross-border transactions will likely continue to be attractive options, subject to increased regulatory scrutiny in certain industries and of certain buyers.”
5. Board composition
Akin Gump recommends that companies should review the applicable diversity-related obligations in their jurisdictions and assess their current board composition, director search and nomination process, board refreshment practices and diversity policies.
6. Shareholder activism
In 2018, companies can expect to see more shareholder activism, with increased emphasis by prominent investors on challenging transactions, corporate strategy and traditional corporate governance concerns, such as board composition and staggered boards.
7. Internal investigations
Transparency and regulatory compliance have become key priorities following tightened anti-money laundering and financial transparency regulations. Directors should expect internal scrutiny to remain a priority. Akin Gump writes: “The decision whether or not to undertake an independent internal investigation, and how, requires careful consideration and consultation with counsel, since the response of the board will have important implications for the ultimate effects on the company.”
8. SEC regulatory relief
The law firm notes: “We expect that the Trump administration and the Republican-led U.S. Congress will advance reforms in 2018 designed to encourage companies toward public ownership and to facilitate capital formation in both public and private markets.”
9. SEC enforcement
Akin Gump states that, in addition to new leadership at the SEC, ambitious legislative proposals in Congress and further developments in insider trading law have the potential to impact SEC enforcement, although certain enforcement streams, such as accounting and other disclosure-related investigations, are likely to remain largely unchanged.
10. Trade and sanctions
Following the expansion of sanctions by the US against Iran, Russia, Venezuela and North Korea, boards should be vigilant in understanding how these evolving rules apply to the business activities of their companies and management teams.
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