A Comprehensive Outlook for 2024: Data, Ethics, and Governance

A Comprehensive Outlook for 2024: Data, Ethics, and Governance

While several trends have occurred over the years in the corporate governance landscape, there is a general sense among directors and business leaders that 2024 holds the potential for even more significant changes. These changes are driven by certain key trends that will continue to shape organisations, from the growing influence of artificial intelligence to the increasing impact of economic conditions. Boards must be prepared to adapt and navigate these challenges.

We’re kicking off the year with a deep dive into the Society’s Outlook for 2024, to uncover the top trends poised to redefine corporate governance. If you have been wondering about these trends and how they will influence corporate governance soon, this article is for you.

What Lies Ahead for Corporate Governance in 2024?

According to a survey by the US National Association of Corporate Directors (NACD) involving over 500 board directors, economic conditions are the primary concern in 2024. Other key trends include rising regulations, concerns about data policy and cybersecurity, and the increasing use of artificial intelligence. These are contributing factors to our outlook for 2024 and beyond. Now, let’s look at the trends more closely.

1. The Rise and Rise of Artificial Intelligence (AI):

Technology continues to disrupt and reshape corporate governance, and the emergence of Artificial Intelligence (AI) has raised the bar higher than ever. AI is revolutionising industries, and its impact on corporate governance is undeniable. Hence, boards need to understand how AI can influence board oversight, strategy, and decision-making, for better or for worse.

One compelling reason to closely observe AI is its ability to analyse vast datasets, predicting potential risks ranging from cybersecurity threats to financial market fluctuations. This proactive approach empowers boards to implement preventative measures and mitigate potential damage before it manifests.

AI can automate tasks, enhance compliance, and improve risk management. However, it is crucial to address ethical considerations and potential biases associated with AI implementation. Striking a balance between leveraging AI’s capabilities and ensuring ethical governance practices will be pivotal for organisations navigating the evolution of corporate governance in the digital era.

In light of this disruptive trend, it’s worth evaluating your organisation’s ability at the board and management level to leverage AI. Prioritising the development of such expertise should be a strategic priority as the year progresses.

2. Data Privacy Policy and Cybersecurity

In the current era, data protection is no longer optional, it’s critical. This is why Influential regulations like the EU’s GDPR are paving the way for stricter privacy standards globally, with the US and other African nations likely to follow. Therefore, to navigate this change, organisations need stringent data governance practices. Furthermore, adhering to strict data governance practices is crucial. Simultaneously, having a robust cybersecurity infrastructure is equally essential to prevent data breaches and ensure the security of the information safeguarded by these policies.

It is noteworthy that, more often than not, data breaches occur not due to sophisticated hacking but rather through human error or negligence. This is why we suggest data training for both employees and management. Staying ahead of this trend will mean providing your employees with the knowledge and skills to recognise phishing attempts, identify suspicious activities, and handle sensitive information securely. Structuring your training with regular sessions covering topics such as password hygiene, data classification, and reporting procedures is equally essential. Finally, this proactive approach will not only mitigate the risk of data breaches but also build trust with customers and stakeholders, ultimately safeguarding your organisation’s reputation and giving you a competitive advantage.

3. The S in ESG Dominates:

Environmental, social, and governance (ESG) factors continue to be increasingly important for investors, consumers, and regulators. Boards must; integrate ESG considerations into their business and culture, develop robust ESG policies and practices, and disclose ESG performance transparently and regularly. However, this year’s trends and patterns are revealing that organisations are placing more emphasis on the S in the ESG.

  • Social issues are gaining increased attention from the public and all stakeholders. Concerns such as diversity, equity, inclusion, employee well-being, data privacy, and community engagement are now significant for stakeholders. Organisations with robust social practices are viewed as more responsible and appealing to investors and stakeholders. This also extends to attracting talent, as skilled individuals prefer organisations aligned with their values. Companies with strong social practices are better positioned to attract and retain top talent.

    On the other hand, companies with poor social practices could face potential reputational damage and even boycotts. Similarly, governments and international bodies are imposing stricter regulations and reporting requirements on the social aspects of business, urging companies to enhance their social performance and transparency.

    This focus on the “S” in ESG is anticipated to grow in 2024 and beyond. Forward-thinking companies will prioritise robust social practices to remain sustainable, competitive, and appealing to investors, employees, and consumers.

    It is important to appraise how your organisation treats social issues. Are your social policies helping you move forward, or are they holding you back? Embracing the ‘S’ will ensure long-term success and contribute to a more just and equitable future.

    4. Geopolitical Crises and a Global Election Year:

    This governance trend outlook is particularly interesting to us because geopolitical instability and elections can have significant implications for organisations. This suggests that boards must be mindful of how geopolitical tensions and conflicts can lead to economic tension and impact business operations, This is exemplified by ongoing situations like the lingering Russia vs Ukraine situation, the Israel-Palestine conflict or local crises such as the Plateau crisis in Nigeria.

    Likewise, changes in government, such as recent elections in Nigeria, Argentina, and Taiwan or incoming major global events like the US elections, could result in new administrations implementing measures that directly affect businesses, including tax adjustments, currency valuations, or regulatory/economic changes. Boards must be alert and strategic to understand and adapt to these potential shifts.

    From the rising geopolitical instability, and the upcoming elections all over the world to the rapid government-led changes in Nigeria, is your organisation poised to navigate the possible changes this year could bring?

    5. Stakeholders Activism and Engagement

    This year, boards need to exhibit sensitivity to public opinion and social movements, recognising their influence on stakeholder expectations. This awareness becomes particularly important in the African context, where recent years have witnessed an increasing commitment from stakeholders to express their views on platforms like the Internet. Organisations whose boards overlook or underestimate these dynamics may find themselves at a significant disadvantage.

    Furthermore, economists are indicating that inflation will likely continue to rise in 2024. This trend is expected to lead to increased activism from various stakeholders, including investors. They will demand clear, actionable strategies from boards and directors, including cost-cutting measures, operational optimisation, and improvements in shareholder value and efficiency.

    Does your board have a stakeholder engagement/communication strategy? Boards must be prepared for strategic, transparent, and proactive stakeholder conversations. They must communicate their commitment to value creation and protection even amidst economic downturns. Failing to do so could invite increased scrutiny and pressure from shareholders.

    Final Thoughts

    As we fully embark on the journey into 2024, the corporate governance landscape stands at the cusp of transformative changes. The trends outlined above point towards a profound shift in the way organisations conduct their affairs. The emphasis on the “S” in ESG, highlighting social responsibility, mirrors a growing societal demand for ethical and inclusive practices. As stakeholder activism gains momentum, boards must engage in strategic and transparent conversations to navigate the evolving economic landscape. It becomes imperative for boards to not merely react but proactively incorporate risk mitigation and foresight into their strategies.

    In this era of evolving risks, where the rising prominence of Artificial Intelligence and increasing data reliance pose new challenges, cyber security takes centre stage. Boards must recognise the critical importance of ensuring cyber security is at the highest level to avoid data breaches that could compromise both trust and operations.

    By understanding, anticipating, and implementing conscientious practices, boards will guide their organisations toward a sustainable and successful future amidst the dynamic challenges of 2024 and beyond.

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