Thomson Reuters Corporation : Increased focus on governance driving the volume
of board materials to new heights, reveals Thomson Reuters Annual Board
Survey exposes gaps in major corporations' ability to exercise adequate
corporate governance and risk oversight
LONDON, 08 February 2013 - The increasing weight of corporate governance, more
stringent regulatory processes and outdated Board structures are preventing
Boards from adequately engaging in and setting appropriate risk management
cultures within their organizations, according to a new survey by Thomson
As regulators demand greater risk oversight, the survey found a quarter of
Boards are not actively engaged in this process - often hampered by time
constraints and the significant pressures associated with reviewing an
increasing number of Board materials.
The Thomson Reuters survey covered more than 125 general counsel and company
secretaries across a wide-ranging cross-section of industries and geographies
globally. It builds on a survey of similar respondents conducted in September
2011 so presents year-on-year trends and developments. Key findings from the
latest report include:
*On average organizations prepare 92 board books annually; each an average
of 116 pages. This amounts to over 10,000 pages per year, representing a
50% uplift from the average of 5,940 pages reported the prior year.
*Several organizations surveyed prepare more than 300 board books per year,
close to six board books per week.
*An increased expectation of good governance drives Board members to seek
additional outside sources of strategic context and financial insights.
Over 70% of respondents reported a need for competitor insights, financial
analytics and industry information. These are sought outside of
traditional board materials.
*Risk oversight by Boards varies substantially and there is a wide range of
behaviors. Nearly 25% of respondents state that their Boards don't
actively engage in risk oversight. This stands in stark contrast to the
55% of Boards that actively set a risk culture and cascade its policy to
*Almost half of the respondents indicated that they never encrypt their
Board materials, and eighteen percent indicated that they only
occasionally encrypt their information
*Only thirty percent of respondents were confident that Board members
destroy all copies of Board-related emails and documents in accordance
with document retention policies
*Over half of the respondents indicated that they had been in a situation
where Board members had left sensitive documents in public places or had
heard of instances of sensitive Board materials being left in public
"Corporate governance is becoming ever more complex due to the fluctuating
economy, increased regulatory requirements and greater regulatory scrutiny,"
said Mark Schlageter, managing director, Governance, Risk & Compliance,
Thomson Reuters. "This is placing increased responsibility on the Board of
Directors and greater demands on accountability and transparency. It is
therefore essential that Boards have all the strategic business and industry
intelligence they need at their fingertips to ensure they understand the
entire picture when making decisions and to have better risk oversight across
Greater volume of Board materials
Increased focus on board governance appears driving the volume of board
materials to new heights and is presenting a real challenge for Directors and
Company Secretaries alike. The challenge of producing and reviewing board
books is growing. On average, among respondents, 92 board books are created
annually, each with an average of 116 pages. This means that Company
Secretaries prepare and distribute an average of over 10,000 pages of
confidential material to their Boards every year. This number is more than 50%
higher than the previous year's survey.
An increased expectation of good governance drives Board members to seek
additional sources of strategic context and financial insights. Over 70% of
Directors reported a need for competitor insights, financial analytics and
industry information - all of which are sought outside of traditional Board
Need for better risk mitigation
Most major corporations surveyed were found to have significant security gaps
leaving sensitive board-level information open to information theft and
hacking. In particular, it was found that the majority of respondents are
regularly sending confidential board material to their members via courier or
through unsecure, noncommercial email addresses. In addition, the percentage
of respondents reporting board members' loss of computing devices or mobile
devices to misplacement or theft grew by nearly 100%. Two-thirds of board
documents and communications were also reported to be distributed through a
variety of devices and servers, up sharply from the corresponding 2011 survey.
Another vulnerable area is in risk oversight and regulation with a quarter of
respondents stating that their boards don't actively engage in risk oversight.
In addition, while over three quarters of respondents acknowledge that their
board seeks to remain up to speed on major areas of regulation, only thirty
two percent point to the board's adoption of policies, some of which were
referred to as "gold-plated".
Board security more critical
Board members are expected to deal with a wide range of issues at both a local
and global level and their responsibility for cross-border issues continues to
grow. As a result, the majority of board documents and communications are
likely contained across a variety of devices and servers (sixty eight percent
this year), up from fifty two percent in the 2011 survey. Board materials are
also put at risk by a common Board member practice of printing and carrying
documents originally sent electronically, futher exposing an organization to
risk of theft or loss of commercially sensitive documents.
The results also suggest that Directors are using an increased number of
mobile devices to access board materials and that most organizations are not
tracking all the various computing devices that Board members are using to
retrieve and save board documents. Private mobile devices dominate the use of
mobile technology by Boards. Over seventy percent of respondents indicated a
BYOD (Bring Your Own Device) reality at the board level, as organizations did
not supply Board members with mobile devices specifically for the purpose of
board communications. This is an area of considerable risk for Company
Secretaries who are not only charged with the creation but also the
destruction of confidential board materials.
A detailed report on the survey's findings can be found at:
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