Disruption a key challenge for directors

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Most directors (73%) are spending more time on risk than a year ago yet only half say they have the capacity to deal with increasing business complexity – and 47% expect to face major disruption within the next two years.

The latest IoD NZIER Director Sentiment Survey, designed to take the pulse of the director community, says technological and business disruption, and the time spent on risk oversight are key challenges for directors.

IoD Chief Executive Simon Arcus says disruption will happen, it’s not a case of if but when, and directors being involved in the conversation is good news.

“Developing board and organisational capability are areas of focus for directors to ensure organisations are resilient, so it is pleasing to see that 60% of boards agree diversity is a key consideration and 62% regularly discuss composition for the future,” Mr Arcus says.

“Diversity of thought and experience brings a broad range of perspectives to the boardroom and increases the potential for successful and effective risk oversight.”

Directors are somewhat less optimistic about economic performance than a year ago but are still buoyant about business performance. They see global growth, labour quality and red tape as the main barriers to business and economic performance. The results show 67% expect the performance of their company to improve, down from 71% in 2014, while 35% expect the New Zealand economy to improve, down from 47% in 2014.

NZIER Chief Executive Laurence Kubiak highlights concern shown by many directors about the global economy. 

“There have been increasing concerns about the growth outlook of China, which is a key market for many of our businesses.”

Nonetheless, directors were more positive about the New Zealand economy than businesses surveyed in NZIER’s latest Quarterly Survey of Business Opinion. “More recent developments show an improvement in economic conditions, and that has likely improved directors’ confidence about the economy.”

Technological disruption has gained prominence as a business risk, and is a new entrant to the top ten risks. Despite that just 27% of boards regularly discuss cyber risk and are confident about their company’s capacity to respond to an attack or incident.

“Most businesses use or rely on technology to operate – cyber risk is a reality of our times – so the ability of boards to consider it as part of enterprise risk is critical in ensuring directors are confident about business resilience,” Mr 

The IoD is pleased to see the improvement in health and safety leadership, with 60% saying they have the capability to comply with the new legislation, up from 51% in 2014. Just 8% say they are not ready.

The survey was conducted in October 2015 by the IoD and involved 820 members of the Institute of Directors.
  • amir on 17/11/2015 10:41:57 AM

    China is making and shaping the Australian Economy. China is blessing in Disguised that helped the Australian economy even all the Europe and USA is in terrible Sub Prime Mortgage Phenomenon. It is now when the Mines and Minerals are facing gigantic slump. It is China which has invested in Property which improved the construction industry in Australia. But this time the Reserve Bank make the mistake. It should consider the other factors and control it because at last there will be the industry who give pocket money for paying home loan installments. But the RBA has ignored this factor at last now the prices has started to drop and the time may come when we may see a situation that every one says bank to take the property because we have no money to pay the installments. Then there will be huge default in Banks loan and losses to the investors in Banks. The banks are rising interest rates though the Central bank has decreased the discount rates. But will further aggravate the situation that the nation will earlier face the situation of default than the actual it come.

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