Mark Smith

Partner

mark@jmsmithlaw.com

Being a corporate director is never easy. Not only do you manage activities and operations of organizations and employees, but you also oversee serious issues that could potentially interfere with or even ruin your organization’s progress. A recent study identified several current issues that are causing corporate directors to lose sleep. Here are the top five concerns:

  1. Cyber Risk and Data Security: With the recent spike in cyber-attacks on big name companies, it’s no wonder that this issue is at the number one spot. Given the increase in risks and data breaches, the rising costs of cyber security, investors requesting accountability, and companies needing crisis management plans in place, directors and general counsel are feeling the pressure from all sides. Therefore, officials should maintain strong defenses against breaches, vigilantly monitor their digital systems, and consider employing outside firms to audit data security.
  2. Mergers and Acquisitions: Directors mentioned they will devote increased time in M&A in response to the increased activity and growing risks. The rise in mergers activity drastically raises the chances of transaction risks. As a result, directors should exercise extensive due diligence to mitigate these risks and avoid potential legal pitfalls.
  3. Shareholder Engagement: Companies are more worried than ever in making sure that their shareholders are engaged and satisfied with company decisions. Shareholder activism is on the rise—leading to the removal of directors and the enforcement of specific business strategies. In order to avoid such aggressive activist approaches, directors should maintain an open dialogue with their shareholders. This type of engagement builds investor confidence while providing board members a chance to identify and evaluate advantageous opportunities.
  4. Governance and Compliance: Government regulations have taken a shift in approach from the implementation of procedure based rules to a heavy emphasis on investor transparency and disclosure. The aggressiveness of the SEC in pursuing even the most minor of infractions indicate this dramatic change. Therefore, directors need to ensure that they update and maintain an effective system of government compliance within the company consisting of a transparent internal investigation process and anti-retaliation policies to protect employees who may turn whistleblower.
  5. Social Media Risks: The growth of social media has opened a whole new world of risks for companies to address and handle. The internet is a brilliant marketing platform. However, the likelihood of inappropriate behavior and improper use of social media presents several risks in terms of reputation and sales for companies. Directors should consider implementing social media policies in order to protect the continued use of this competitive form of marketing in their favor. However, Directors should certainly take into account the National Labor Relations Board’s recent activity and guidance to assure the company does not violate any employee rights.