Annual Survey Finds Increased Confidence for
Cyber Risk Preparedness, Shareholder Activism and Regulatory
Compliance
FTI Consulting, Inc. (NYSE:FCN), the global business advisory firm
dedicated to helping organizations protect and enhance their
enterprise value, and NYSE Governance Services (NYSE:ICE), a
leading provider of corporate governance, risk, ethics and
compliance services for public and privately held companies, today
released findings from the 11th Annual Law in the Boardroom
Study. The collective results point to increased confidence in
several areas of key issues in corporate America today, including
cybersecurity ("cyber") risk preparedness, shareholder activism and
regulatory compliance. Three emerging issues found in the survey
include disruptive innovations, third-party risk and enterprise
risk management.
This year’s study revealed that while cyber risk topped the list
of issues keeping directors and general counsel up at night for the
second consecutive year, a growing emphasis on cyber risk
preparedness may have helped ease their levels of concern, which
dropped 34 and 29 percentage points, respectively, over the past 12
months, from 90 percent and 86 percent in 2015. Furthermore, 78
percent of those surveyed believe they now have a good
understanding of the cyber risks within their company. Their new
confidence is evidenced by the fact that 77 percent of directors
said the reports they receive from management allow them to provide
effective counsel, 74 percent have been trained on cyber awareness,
and 53 percent believe their company is well prepared in the event
a cyber breach were to occur.
“It is encouraging to see that corporate leaders have taken the
risk posed by cybersecurity breaches to heart,” said Mitch Silber,
Senior Managing Director in the Forensic & Litigation
Consulting segment at FTI Consulting. “Compared with last year’s
results, the increase in confidence expressed by directors and
general counsel, as well as the increase in training reported,
shows that companies are getting both smarter and serious about the
risks posed by cybersecurity threats to their business.”
While innovation can be a tremendous opportunity for growth, it
can also be an immense threat to organizations in an era where
emerging technologies can make or break a market share advantage
practically overnight. This year, the evasive threat of disruptive
innovation has emerged as a key concern. Although 62 percent of all
respondents stated that they hold regular, productive discussions
on enterprise risk management and three-quarters believe they spend
enough time discussing risk oversight matters related to the
overall strategy of the company, nearly half (47 percent) of
respondents reported being concerned or highly concerned with
disruptive innovations that can gradually threaten their industry
and market share.
Shareholder engagement, although a top concern, was another area
in which directors showed increased confidence compared to previous
years, with only 28 percent saying they are concerned or very
concerned about activism or litigation risk, a decrease of eight
percent from the previous year. Their increased confidence may be
related to a finding that shows the vast majority (84 percent)
believe they have assessed the vulnerabilities that might make
their company a target for activists, up from 69 percent last year.
This year, 63 percent of directors stated that their boards have
taken steps to improve their ability to communicate with
shareholders by undergoing specific training. Shareholder
engagement concerns have remained steady for general counsel (43
percent were concerned in 2015 compared to 41 percent in 2016),
however, the number of respondents who said they have assessed the
vulnerabilities that might make their company a target for
activists increased from 76 percent to 89 percent
year-over-year.
“The higher levels of confidence among those surveyed speak
volumes about the importance of building and measuring a strong
culture of compliance,” said Adam Sodowick, President of NYSE
Governance Services. “By regularly assessing potential
vulnerabilities or identifying new cybersecurity issues that were
previously unknown, today’s companies can help protect their brands
and their employees by seeking comprehensive compliance
solutions.”
Increased confidence was also seen in the area of anticorruption
and ethics compliance programs, with overwhelming majorities of
directors and general counsel (95 and 90 percent, respectively)
stating they were either confident or very confident in their
internal compliance programs in this area. This year, general
counsels appear to be more concerned with third-party risk than
directors (32 percent compared with 17 percent). While general
counsel showed the same level of concern last year, double (34
percent) the number of directors reported being “somewhat” or “not
at all” confident in their handling of third-party risk in 2015.
Enterprise risk management is also still top-of-mind this year, and
a particular concern for directors, due to the multiple liabilities
that can emerge from third-party relationships in today’s global
environment.
Neal Hochberg, Global Leader of the Forensic & Litigation
Consulting segment at FTI Consulting, said, “Ethics and compliance
are not just internal issues, and while companies are showing
tremendous confidence in their internal compliance programs, there
is growing concern about their ability to manage the kind of
third-party compliance issues that potentially represent as great
of a risk as those that arise internally. Companies should be
careful to consider all potential compliance risks, not just those
that come from within.”
About the Law in the Boardroom StudyThe annual
Law in the Boardroom Study, designed by FTI Consulting and NYSE
Governance Services, was conducted between February and March of
2016. The survey reflects the responses to weigh in on and identify
the latest and most pressing governance trends and legal matters in
today's boardroom from 354 directors and general counsel of
publicly-traded US companies.
The full report can be accessed here.
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organizations
protect and enhance enterprise value in an increasingly complex
legal, regulatory and economic environment. With more than 4,600
employees located in 28 countries, FTI Consulting professionals
work closely with clients to anticipate, illuminate and overcome
complex business challenges in areas such as investigations,
litigation, mergers and acquisitions, regulatory issues, reputation
management, strategic communications and restructuring. The Company
generated $1.78 billion in revenues during fiscal year 2015. For
more information, visit www.fticonsulting.com and connect with us
on Twitter (@FTIConsulting), Facebook and LinkedIn.
About NYSE Governance Services
NYSE Governance Services is the leading governance, compliance,
and education solutions provider for companies and their boards of
directors. Through a complete set of technology-enabled and
data-driven solutions designed to address compliance,
accountability, and risk management, NYSE Governance Services helps
companies comprehensively build a culture of integrity from
employee to board level. NYSE Governance Services is a subsidiary
of the New York Stock Exchange Group, an Intercontinental Exchange
company (NYSE:ICE). For more information, connect with us at
nyse.com/governance, @nysegov or LinkedIn.
About NYSE Group
NYSE Group is a subsidiary of Intercontinental Exchange
(NYSE:ICE), a leading operator of global exchanges and clearing
houses, and a provider of data and listings services. NYSE Group
includes exchanges, market data and connectivity services. The
equity exchanges—the New York Stock Exchange, NYSE MKT, and NYSE
Arca—trade more U.S. equity volume than any other exchange group.
NYSE is the premier global venue for capital raising, leading
worldwide in IPOs, including technology IPOs. NYSE Arca Options and
NYSE Amex Options are leading equity options exchanges.
About Intercontinental Exchange
Intercontinental Exchange (NYSE:ICE) operates the leading
network of global futures and equity exchanges and provides world
class clearing, data, and listing services across many markets. The
New York Stock Exchange is the world leader in capital raising and
equities trading.
Trademarks of ICE and/or its affiliates include Intercontinental
Exchange, ICE, ICE block design, NYSE and New York Stock Exchange,
Interactive Data, and Trayport. Information regarding additional
trademarks and intellectual property rights of Intercontinental
Exchange Inc. and/or its affiliates is located
at www.intercontinentalexchange.com/terms-of-use
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 – Statements in this press release regarding
ICE's business that are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion
of additional risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see ICE's Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risk factors in ICE's
Annual Report on Form 10-K for the year ended December 31, 2015, as
filed with the SEC on February 4, 2016.
FTI Consulting, Inc.
1101 K Street NW
Washington, DC 20005
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Media Contacts:
Nicole Madison
+1.212.850.5647
nicole.madison@fticonsulting.com
Brendan McManus, NYSE
+1.212.656.2135
brendan.mcmanus@nyse.com
media@theice.com
Investor Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
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