Royal Commission fallout will define the governance professional's role through to 2025
Increased regulatory scrutiny, business complexity, and technological disruption to define governance practice for the foreseeable future
The governance professional of 2025, regardless of industry, will still be working to manage additional regulatory scrutiny, more extensive compliance requirements within a more complex working environment, on top of the technological issues around disruption, data management and rate of change.
This comes from new research by the Governance Institute of Australia: The Future of the Governance Professional, released today.
"While much of the research focused on the effects of technology by 2025, such as the accelerated rate of workplace disruption via Artificial Intelligence, blockchain, and new data privacy legislation, it is clear that most governance professionals believe they will be dealing with the fallout of this year's enormous regulatory changes for the foreseeable future," said Megan Motto, CEO, Governance Institute of Australia.
"This has been driven by the Financial Services Royal Commission, and other changes such as the Banking Executive Accountability Regime (BEAR) and the newly revised ASX Corporate Governance Principles, which now demand in-depth assessments on non-financial metrics, such as diversity, environmental sustainability and culture.
"What is interesting is that this effect flows on beyond the financial sector and into all Australian organisations, regardless of size or industry. They all expect additional regulatory scrutiny, and compliance burdens, especially amongst the next generation of governance professionals."
The Future of The Governance Professional involved interviewing key governance professionals from a number of Top 100 ASX companies, a survey of the membership based upon those insights, and concluded with a roundtable session chaired by Governance Institute of Australia CEO, Megan Motto.
Highlights: Future of the Governance Professional
- Directors may need to limit the number of board appointments they accept as the role becomes more complex and demanding of their time.
- A stronger focus on board renewal and the maximum tenure of board members. That could open up boardroom seats for increased levels of boardroom diversity
- There will be more Millennials on boards and they are likely to place greater emphasis on ethics and social good. They will also potentially be less rigid in their understanding and style, and keener to push the envelope.
- Scrutiny of both director and executive pay is likely to rise.
- Future company secretaries may also be asked to sit on the boards of other organisations to gain different perspectives to support their internal roles.
- The company secretary is expected to play an important role and become the ‘conscience’ of the board or its ‘chief ethical adviser’.
- Just 30% of governance respondents stated that they were 'well prepared' or 'very well prepared' to face the challenges of the future, 9% said they were not prepared.
- The community doesn’t trust institutions anymore and it does not want regulators to deal amicably with them. It wants to see public revelations when people fail to comply and, in some instances, it wants people brought to the courts and punished. [Pg. 12]
- AI is seen as a positive, that will help governance professionals make decisions based around quantitative assessments and emotional intelligence (39%), improving the quality of data a board receives (25%) and taking over routine administrative tasks (23%). Just 4% think AI will cause job losses in administrative roles.
The whitepaper will also be discussed in detail at the Governance Institute's National Conference on 2 and 3 September at the Sofitel Sydney. To enquire about media passes, please contact email@example.com
Governance Institute of Australia would like to acknowledge our sponsors Diligent and LexisNexis for their support of this research.
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Media contact: Hannah Edwards, firstname.lastname@example.org
About Governance Institute of Australia
A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors. Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.
Whitepaper: The Future of the Governance Professional
Media Release: Royal Commission: Governance culture of ‘box-ticking’ over