Economic uncertainty, competitive threats and cost inflation are cited as the most significant risks to business performance in 2022. According to a survey by Gartner, digital tech initiatives, workforce issues, ESG, growth, financial matters, risk management and business expansion and diversification are seven of the top priorities for boards this year.
Fifty-seven per cent of board members say they have increased their risk appetite or expect to do so in 2022, according to a survey by Gartner Inc.
Board directors cite economic uncertainty (38%), disruptive business models from competitors (35%) and cost inflation due to supply shortages (28%) as the top risks to business performance.
Gartner conducted its 2022 Board of Directors Survey online among 273 respondents in the U.S., Europe and APAC who sit on boards.
“During the pandemic, boards recognised that they needed to become comfortable operating in an environment of significant risk, as standing still was not an option,” said Partha Iyengar, research vice president at Gartner. “This drove them to embrace the ‘try fast, fail fast approach,’ and into 2022, boards will continue taking risks such as making technology investment decisions with incomplete information or making financial bets without up-front visibility around a guaranteed return.”
Digital technology remains a top priority
Director commitment to digital technology initiatives remains strong, as it is ranked a stop strategic business priority by 58% of survey respondents.
Figure 1: Board directors’ top seven strategic business priorities for 2022/2023
“Having invested so much in digital business over the past 12 to 18 months, enterprises are pausing to validate their strategy and ensure ROI,” says Iyengar. “For boards, the core focus is now on technology integration and creating a more enduring and systemic digital economic architecture, where technology is infused throughout the business and drives business outcomes.”
In the survey, 64% of board directors had tried to alter their enterprise economic structure to a more digital economic architecture – by changing their capital allocation and governance methods to accommodate digital investments.
One-third of directors have shifted digital business-related budgets to business functions rather than central technology budgets; 40% are changing the metrics used to evaluate ROI from digital investments.
Despite boards increasingly emphasising the role of technology beyond IT, CIOs remain visible as a critical partner in board directors’ digital initiatives.
A third (34%) of directors say they have a formally constituted technology, digital or IT subcommittee, and the vast majority (94%) include the CIO or CTO as a member.
‘Environmental, social and governance (ESG), health and sustainability rounded out the top three priorities for boards, up by 100% from last year.’
Workforce and social issues a rising focus
For 52% of directors, workforce issues ranked among the top strategic priorities, representing an 86% increase in interest over the 2021 survey.
“Workforce concerns are closely linked with technology transformation,” says Iyengar. “As enterprises accelerate their digital business initiatives, issues such as the IT skills shortage, the need to create a digitally agile workforce and culture transformation become that much more critical.”
Environmental, social and governance (ESG), health and sustainability rounded out the top three priorities for boards, up by 100% from last year.
About 30 per cent of boards report that they publicly engage in social or political issues. In comparison, nearly half of board directors (45 per cent) include diversity, equity, and inclusion (DEI) in their agendas at every board meeting or quarterly.