Thursday, September 22, 2011
[IWS] Thomson Reuters BOARD GOVERNANCE SURVEY 2011 Results [22 September 2011]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Thomson Reuters Accelus
BETTER BOARD GOVERNANCE: COMMUNICATIONS, SECURITY AND TECHNOLOGY IN A GLOBAL LANDSCAPE OF CHANGE [22 September 2011]
Results of the 2011 Thomson Reuters Board Governance Survey
[full-text, 12 pages]
Press Release 22 September 2011
Corporate Governance Survey: Security and Regulatory Failings Top Concerns
(Business Law Currents) The vast majority of companies fear regulatory change and are exposed to significant security gaps that leave sensitive board-level information open to information theft and hacking, according to a Thomson Reuters survey of global company secretaries and in-house lawyers.
The results of the report show a troubling lack of ability to keep up with regulatory change and communication systems that are struggling to handle multiple directorships, regulatory change, frequent international travel and unsecured email.
According to the survey, the average number of board members for companies surveyed was 10, with the vast majority (54%) resident across a number of different countries. A fact that led most company secretaries to disclose that an overwhelming number of directors travelled extensively; frequently crisscrossing multiple borders.
Despite international travel commitments and members from multiple timezones, most boards (60%) continue to rely on distributing board packs/books in paper with only around a quarter of boards taking advantage of online secure board tools.
Also of concern was the lack of secure communications used by companies to control the supply of sensitive commercial information. Over half of respondents questioned, stated that board communications were never encrypted and around 73% of boards either occasionally, regularly or always distributed board level information to personal, non-commercial email addresses (eg Hotmail or Gmail accounts).
With boards of directors handling some of their companies’ most critical and sensitive information, including business strategies, discussion of executive hiring and compensation, legal issues, internal investigations and more, the findings are particularly worrying. The high use of unsecure and personal communication systems suggests that many companies are running a high risk of security breaches.
To further compound matters, around 21% of company secretaries didn’t believe that corporate retention policies were working and around 34% believed that directors kept sensitive information in contravention of company guidelines. Breaches included; keeping documents on private work stations (79%), not destroying sensitive documents (34%) and accessing networks through wi-fi or unsecured networks (50%).
As well as struggling to keep a lid on the communications of jet-setting directors, the survey reveals that the vast majority of companies had boards where at least 50% of directors also help directorships at rival companies - a fact that led many company secretaries to complain of conflicts of schedules and difficulties in implementing corporate governance standards.
Also of concern to company secretaries was keeping up with the flood of regulatory change that has swamped many companies in the last couple of years. The vast majority (64%) stated that boards were under greater pressure than ever before and the speed of regulatory and governance changes remained challenging. Despite these challenges around 17% of companies had tried to go beyond current corporate governance norms, attempting to implement gold-plating to avoid reputational risk.
A number of corporate secretaries for global corporations also complained of difficulties of complying with regulation in multiple jurisdictions and the difficulty of applying governance standards across international boundaries. A detailed report on the survey’s findings on security vulnerabilities, attitudes to regulation and governance can be found at: http://accelus.thomsonreuters.com/boardsurvey2011
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