Tag: Board of Directors

Executive Summary

As 2025 unfolds, Boards of Directors find themselves at the epicenter of an unprecedented convergence of digital innovation, regulatory challenge, and emergent risk. The stakes have never been higher, nor the expectations more complex. From the relentless pace of cyber threats powered by artificial intelligence, to the ethical and regulatory labyrinth of AI deployment, and the rapidly expanding universe of privacy compliance and information governance, boards are being called to exercise a level of vigilance and strategic leadership rarely demanded in prior decades.

This report provides a deep analysis of the evolving best practices and emerging concerns in information governance that demand board-level attention. Structured around the four cornerstone themes – Cybersecurity, Artificial Intelligence, Privacy, and Risk Management – it explores not only the foundational responsibilities but also the nuanced ways in which modern board and committee oversight are evolving to match a volatile and hyper-connected environment.

A central takeaway is that effective information governance is no longer a matter of compliance or technology alone. Rather, it is a strategic differentiator, a significant driver of competitive advantage, and a critical measure of ESG performance and reputational resilience. This report draws on extensive recent data and trends, recommendations from leading consultancy and governance organizations, and lessons from regulatory and litigation developments across multiple jurisdictions.

Table: Board-Level Information Governance – Key Themes, Responsibilities, and Concerns (2025)

Table Elaboration

This summary table distills the sprawling imperatives facing boards in 2025, but the true import of each cell comes alive only in detailed analysis that follows. For instance, the primary concern of regulatory compliance referenced for all four areas is no longer static: regulations covering AI and privacy are in a dynamic state of flux in the US, Canada, UK, EU, and throughout Asia-Pacific, demanding boards to move beyond reactive compliance to proactive oversight and scenario-based risk planning. Similarly, competitive advantage through cybersecurity, long considered an IT ambition, is now a C-suite and board KPI strongly linked to trust, revenue, and ESG performance.

Cybersecurity: From Technical Silo to Board-Level Strategic Differentiator

The Shifting Landscape of Cyber Risk

In 2025, the volume and sophistication of cyber threats continues to soar, fueled by nation-state actors, criminal syndicates, and the democratization of attacker tools via generative AI. Cyber risk is now routinely listed as the top threat by global board members, executives, and risk practitioners across industries – from financial services to manufacturing, energy, retail, and healthcare. The Allianz Risk Barometer again ranked cyber incidents as the leading global business risk for the year, with executive surveys echoing these concerns.

Cyber risk is not static: new attack vectors – such as supply chain attacks, ransomware-as-a-service, deepfake-driven phishing, and attacks on AI models – demand that boards move far beyond mere technical literacy or delegated oversight. Digital resilience, encompassing both defense and recovery capabilities, is now fundamental to business continuity and valuation protection.

Board – CISO Relationship and Dynamics

The relationship between the Chief Information Security Officer (CISO) and the board has become a defining factor in long-term cyber resilience. Leading practice requires the CISO to be empowered as a business enabler, regularly briefing the board not just on technical controls and incident counts, but on business risk metrics, threat intelligence, scenario planning, and strategic investment priorities.

Boards are also expected to bridge the typical technical-business gap, demanding CISOs present data and stories in terms directors understand: risk to operations, financial exposure, and compliance with board-defined risk appetite. Open, recurring engagement (rather than sporadic, compliance-driven reporting) is cited as a keystone of mature board–CISO partnerships.

Boards are increasingly including cybersecurity skills in director selection matrices. Yet even boards without such expertise must ensure regular education sessions and access to external advisors to bridge technical knowledge gaps and oversee cybersecurity in strategic, enterprise terms.

Cybersecurity as Competitive Advantage and ESG Consideration

A central trend is the recognition of cybersecurity as a direct competitive advantage and ESG (Environmental, Social, Governance) pillar. Boards are expected to demonstrate how investments in cybersecurity not only protect against loss, but also enable trust, drive resilience, and support sustainable business models. Cyber resilience has become an explicit expectation for investors and rating agencies when evaluating a company’s long-term prospects.

Third-Party and Supply Chain Risk

Boards now oversee third-party and supply chain cyber risk as a central concern, given the cascade effect of high-profile breaches (e.g., SolarWinds, NotPetya) and regulatory focus on operational resilience. Effective oversight requires boards to confirm that management maintains a risk-ranked inventory of critical third-party relationships, enforces rigorous due diligence, and applies continuous monitoring and incident response playbooks that extend beyond the organization’s boundaries.

Incident Response and Scenario Planning

Crisis readiness is a non-negotiable board obligation. Modern boards demand that incident response plans are documented, tested through tabletop simulations, and mapped to the organization’s risk appetite. Active scenario planning – envisioning not only likely attacks but unthinkable “black swan” events – enables directors to test assumptions, clarify roles, and build organizational muscle for rapid, values-aligned response in a crisis.

Summary of Board-Level Cybersecurity Best Practices

• Regular, direct engagement between board and CISO, with mutual understanding of business risk
• Technology and cyber expertise included in board composition, or accessible via advisors/committees
• Cybersecurity considered in ESG frameworks, reporting, and board KPIs
• Supply chain and third-party cyber risk integrated into enterprise TPRM programs, with board visibility
• Incident response and crisis scenario planning as standing board agenda items, with periodic simulations
• Cyber risk issues integrated into strategy discussions – not sidelined as technical/IT topics
• Independent external maturity assessments and regular benchmarking against industry peers
• Board oversight of breach notification, ransom response, and public/stakeholder communications.

Artificial Intelligence (AI): Board Challenges and Strategic Governance in the Age of Intelligence

AI Oversight Moves Center Stage

AI governance has emerged in 2025 not just as a compliance challenge but as a board-level strategic dilemma. The proliferation and mainstreaming of generative AI, machine learning, and automation tools across nearly every business function have confronted directors with the need to govern in a domain characterized by rapid innovation, regulatory uncertainty, and substantial risk of operational, legal, and reputational harm.

Recent survey data indicate remarkable growth in board commitment: as of 2024, over 31% of S&P 500 companies disclosed some level of board or committee oversight of AI, and 20% had at least one director with AI expertise (up from 11% in 2022). Disclosure and committee charters covering AI are trending upwards across sectors, with particular growth in the Information Technology, Communications, and Consumer Discretionary industries.

AI Governance: Committee Structures and Reporting Lines

Boards employ a variety of oversight models. Best practice is sector- and organization-specific but often involves expanding the remit of the risk, audit, or technology committees, or establishing new AI/technology committees to clarify accountability for AI risk, ethics, and strategy.

Notably, shareholder activism in 2024 – 2025 pushed several large companies (banks, retailers, technology giants) to amend committee charters for explicit AI oversight and to improve disclosure around board-level AI governance. There is a marked trend toward assigning strategic AI oversight responsibilities at the full board level – indicating increasing recognition of AI’s pervasive impact beyond IT or compliance domains.

AI Ethics Boards and Cross-Functional Governance

Explicit AI Ethics and Review Boards remain relatively rare (about 2–3% adoption in S&P 500) but are increasing, especially in industries with direct AI R&D or significant customer-facing automation. These entities report, variably, to the board, the risk committee, or the CEO and serve as multi-disciplinary risk/ethics panels – a practice recommended by both global regulators (OECD, UNESCO, NIST, ISO) and leading governance consultancies.

Key responsibilities for such entities include reviewing potential model bias, explainability, safety, privacy compliance, and the implementation of ethical guidelines – often in response to regulatory frameworks or sector standards such as the EU AI Act, AI Risk Management Frameworks, and jurisdictional voluntary codes of conduct.

AI Risk, Bias, and the Board’s Fiduciary Duties

AI’s sheer velocity and complexity dramatically increase the risk that unmonitored automation could escalate small model errors into systemic issues (ranging from discriminatory outcomes to operational, legal, or IP exposure) before human controls intervene. Leading boards are therefore building scenario analysis, real-time monitoring, and bias/ethical auditing into their oversight scope, often through the development of internal AI Centers of Excellence reporting directly to the board’s risk committee rather than to IT or business units.

Board Education and Expertise in AI

Most directors still report only foundational knowledge of AI risks and governance models, with only a minority having hands-on experience or technical backgrounds – a consistent finding across US, Canadian, and European surveys. Training and board refreshment with AI-savvy members or advisor participation in targeted committee meetings are cited as effective strategies to raise overall board fluency.

Shareholder Proposals and External Pressure

AI-focused shareholder proposals grew more than fourfold in 2024, spanning requests for impact assessments, ethical use commitments, transparency on data sourcing, and amendments to board committee charters. These proposals are appearing in sectors well outside “Big Tech”: finance, retail, telecoms, media, consumer services, and even industrials and oil – signaling that investors see AI preparedness and governance as key to long-term corporate value.

AI Regulation: Fast-Evolving, Broad in Scope

Boards are advised to track not only sectoral and jurisdiction-specific regulations (e.g., EU AI Act, Canadian AIDA, US state initiatives, industry codes) but also voluntary global standards (OECD Principles, NIST AI RMF, UNESCO, ISO/IEC 42001, IEEE 7000) that shape responsible AI and can be used to demonstrate “reasonable care” in oversight.

Canadian and US boards, for instance, face a patchwork of privacy and AI mandates, with provinces like Québec already enforcing disclosure and transparency on AI-based decision-making and hiring, and national regulators encouraging voluntary adoption of governance frameworks, pending federal law finalization.

AI Governance as Innovation Catalyst and Reputational Shield

Despite the risk focus, directors and shareholders recognize AI’s potential to drive value transformation, operational efficiency, and market differentiation. Best-in-class board AI governance supports, rather than stifles, responsible innovation by setting clear strategic objectives, establishing agile and transparent oversight, and nurturing an experimental, evidence-based learning culture for rapid adaptation to AI-driven disruption.

Privacy: From Compliance Backwater to Boardroom Priority

Explosion of Privacy Regulation and Litigation

Privacy is now firmly a board-level concern – driven by the explosive growth of global regulations (GDPR, CCPA, CPRA, Law 25 in Québec, and others), the proliferation of class-action lawsuits and shareholder litigation following breaches, and steep increases in statutory penalties for non-compliance. In Canada, the emergence of privacy class actions (often following data breaches), the introduction of administrative monetary penalties, and the increasing focus of proxy advisors and ESG rating agencies mean boards are directly accountable for privacy program effectiveness.

Similar dynamics are evident globally, with regulatory scrutiny reaching new heights -from the EU’s record fines to US SEC enforcement actions, and new requirements for data minimization, transparency, and expanded individual rights.

Board’s Duty of Oversight and Accountability

Boards are required as part of their fiduciary and statutory duties to exercise active, documented oversight of data privacy – ensuring the company understands the purposes and methods of its data collection, is transparent with stakeholders, conducts periodic risk and program reviews, and maintains a robust compliance posture with all relevant laws.

A privacy-by-design approach – embedding privacy safeguards into systems and processes at the outset rather than retrofitting them in response to incidents – is cited as board-level leading practice, and demonstrably strengthens consumer trust and compliance outcomes.

Privacy by Design and Board Responsibility

Successful integration of privacy into product, process, and business model design requires direct top-management and board support. Case studies across sectors find that proactive leadership, cross-functional risk and assessment processes, and executive education foster a culture in which privacy is a strategic asset, rather than a legal burden.

Boards must ensure that privacy programs are adequately funded, systematically reviewed, and that the company can furnish evidence of compliance to regulators on demand. This includes comprehensive documentation, mapping of personal data flows, PIA (Privacy Impact Assessment) procedures, and quarterly targeted staff training – especially for teams handling sensitive information or managing third-party contracts.

Privacy Risk Governance and Third-Party Exposure

With data-driven business models reliant on a vast ecosystem of vendors and cloud partners, boards face growing exposure from privacy failures in third parties. Effective board oversight now includes vendor data privacy due diligence, monitoring, and clear contract compliance requirements aligned with applicable frameworks (e.g., NIST, ISO 27001).

Emerging Privacy Priorities for Boards

• Defining and regularly reviewing the company’s purpose for personal information collection and retention
• Mandating and overseeing privacy-by-design principles, and documenting evidence of program maturity
• Preparing for class action and derivative lawsuits linked to breach of privacy oversight duty
• Integrating privacy into board-level crisis and reputation management, with ready response plans for data incidents
• Supporting CPO/DPO roles and regular reporting to the board on privacy metrics and program status
• Ensuring strategic alignment between business growth initiatives and privacy compliance impacts.

Risk Management: The Evolution of Board Risk Committees and Oversight Mechanisms

The New Face of Board-Level Risk Committees

In 2025, the evolution of risk management at board level has become as dramatic as the changes in the risk landscape itself. The traditional, quarterly risk review has proven utterly insufficient – modern committees must now operate as dynamic, multidisciplinary teams that actively monitor, anticipate, and lead rapid organizational responses to digital, regulatory, ESG, and geopolitical risks.

Charters are being updated to codify information governance, cybersecurity, AI ethics, and data privacy oversight as standing committee responsibilities. Sector exemplars include adding digital, privacy, or AI specialists to risk and audit committees, and establishing cross-functional links with internal audit, legal, compliance, technology, and ESG teams.

Board Composition and Digital/Tech Acumen

Digital acumen in the boardroom is no longer a “nice to have.” There is clear evidence that boards with members experienced in data science, cybersecurity, privacy law, and AI governance are better equipped to challenge management, ask the right questions, and maintain actionable risk registers that reflect real operational exposure.

Further, the need to bridge expertise gaps is driving the formation of technology/innovation committees, the routine use of external experts, and targeted director education programs focused on technology and risk developments.

Dynamic Crisis and Incident Scenario Planning

Agile risk oversight requires readiness not only for likely risks but also for “unthinkable” black swan events – high-impact, low-likelihood scenarios such as systemic supply chain attacks, major regulatory shocks, or catastrophic AI failures. Boards are increasingly engaging in scenario planning, crisis simulations, and after-action reviews to pressure-test assumptions and foster organizational learning at all levels.

ESG and Information Governance Integration

Boards are aligning risk management with ESG priorities, including the development of “double materiality” frameworks that consider both financial and broader societal impacts of cyber, privacy, and AI risks. Disclosure of material IT, cyber, and AI risks in ESG reporting is quickly becoming a global investor expectation and board-level requirement. Supply chain, third-party, and data privacy exposures must be incorporated into both sustainability and financial risk reporting frameworks.

Standing Committee Charters and Best Practices

Charters for risk, audit, and/or technology committees should be reviewed and updated annually, specifically to clarify oversight roles for cyber, AI, privacy, third-party, and ESG-related risks. Boards should also ensure sufficient skills diversity within committees and establish clear escalation, reporting, and review cadence for major incidents and audits.

Key Cross-Theme Trends and Strategic Priorities

1. Board Education and Digital Fluency

The pace of technology-driven change means that continuous director education is an existential necessity. Boards must regularly schedule briefings on cybersecurity, AI risk, privacy law, and best-practice governance frameworks, leveraging both internal and external subject matter expertise.

2. Crisis Scenario Planning and Response Integration

Crisis management is now everybody’s business, starting in the boardroom. The board’s defined role is strategic oversight, supporting management but never overstepping into operational boundaries in a crisis. This requires regular crisis simulations, not just tabletop exercises, along with clear post-mortem analysis and integration of lessons learned into the ongoing risk agenda.

3. Proactive Engagement with Shareholders and Regulatory Developments

Directors should anticipate ongoing activism and regulatory scrutiny around all facets of information governance. Proactive disclosure, transparent principles for AI and data management, and regular engagement with investors on ESG, privacy, and risk management practices are now seen as foundational to reputational and capital resilience.

4. Third-Party/Supply Chain, Cross-Functional, and Multijurisdictional Risks

Third-party risk is not only a cyber issue – it is integral to privacy, AI, and ESG frameworks. Boards must oversee holistic TPRM programs, cross-functional reporting, and real-time risk dashboards that reflect the interconnectedness and global reach of today’s digital ecosystem.

5. Embedding Privacy and Security by Design

Privacy by Design and Security by Design are no longer slogans but board-level imperatives, required by regulation and expected by customers and investors. Boards must oversee the proactive integration of these principles into product development, operations, M&A due diligence, and supply chain practices.

Conclusion: The Board’s Imperative in Information Governance for 2025 and Beyond

The expanding scope, scale, and intensity of information governance challenges require a new mindset at the board level. Directors must operate as strategic navigators, charting a course between innovation and risk, compliance and value creation, adaptation and assurance.

Best-in-class boards will distinguish themselves not through mere compliance, but by embedding information governance into the very fabric of their organization’s culture, strategy, and stakeholder relationships. This means fostering mature CISO-board partnerships, demanding robust cross-functional risk governance, committing to director education, and setting a visible example that positions the company as a trusted, resilient, and ethical participant in the digital economy.

The age of digital transformation, AI ascendency, and global data flows will only accelerate. Boards of Directors – in their composition, committee structures, charters, and everyday practices – will define their organizations’ capacity to not only weather the coming waves of risk and regulation, but to seize the unprecedented opportunities they bring.