2019 Focus Areas for Boards: Time for reinvention, especially audit committees.

• Author: Whalen, Dennis T.
• Position: ON THE GOVERNANCE AGENDA

Board agendas should continue to evolve in 2019. The game-changing implications of technology/digital innovation, scrutiny of corporate culture, growing demands to address environmental and social issues, and investor expectations for greater board engagement, diversity, and long-term value creation should all drive a sharper focus on positioning the company for the future.

Combined with concerns about mounting trade tensions, resurging debt, high valuations, and political swings--in the United States, UK, and elsewhere--the year ahead will require a careful balance of near-term focus, agility, and longterm thinking.

At the same time, audit committees can expect their company's financial reporting, compliance, risk and internal control environment to be put to the test in the year ahead.

With that in mind, we've highlighted seven items for boards to consider as they focus their 2019 agendas.

* Take a hard look at the board's composition: Is the talent in the boardroom diverse and aligned with the company's strategy and future needs? A broad range of issues require board focus and leadership--including succession planning, age and term limits, diversity, individual director evaluations, removal of under performing directors, and board refreshment, as well as disclosures regarding these issues.

* Recognize that connecting digital disruption with risk management and strategy is more important --and more challenging --than ever. Help management reassess the company's processes tor identifying the risks and opportunities posed by digital advances and assessing their impact on the company's strategy.

* Help focus the company on long-term value creation and understand the views of all key stakeholders. The shareholder/ stakeholder debate may seem philosophical, but we believe it is a discussion every board should have, as it raises practical questions about the company's strategy and how that strategy should be communicated to investors and other stakeholders--including employees, customers, and communities.

* Make CEO succession and talent development throughout the organization a priority. Are succession plans in place for the CEO and other key executives? Does management have a talent plan that aligns with its strategy and forecast needs for the short and long term?

* Assess, monitor and reinforce culture as a strategic asset and critical risk. Take a proactive approach to understanding, shaping, and assessing corporate culture, including a...