Boards and governance trends for 2025

Diligent predicts: Boards and governance trends for 2025

What’s in store for boards in 2025? From generative AI to fundamental cultural shifts, our Governance Ireland partners and corporate governance experts at Diligent have made their predictions for an uncertain year.

Expert insights offer boards clarity on key areas of focus as they plan for 2025 and beyond. Diligent brought together 65 distinguished board members, C-suite leaders and established subject matter experts to discuss four critical topics influencing the future of business: Generative AI, cybersecurity and data privacy, geopolitical risk, financial fraud and abuse.

As we head into an uncertain year, Dottie Schindlinger, Executive Director of the Diligent Institute & Co-Host of The Corporate Director Podcast, summarises the feelings of organisational leaders to predict the major board and governance trends of 2025.

1. Boards will need to upskill and get experts in the room to harness AI

In 2025, directors are trying to understand their management team’s perspective on generative AI and the opportunities and risks they should be considering; “Boards are concerned about two things regarding AI,” says Schindlinger. “What are the risks of moving too quickly? And what are the risks of not moving quickly enough?”

The report suggests that organizations will start looking at the progress of AI through the lens of two camps: digital native companies and non-digital native companies.

Digital native companies are looking at the realm of innovation. “They are racing to invest in this technology and find what’s so far untapped, asking where the sky is most blue,” says Schindlinger. Meanwhile, non-digital native companies are seeking to understand how they can use AI to increase efficiency and reduce costs. “They’re looking to use these tools to speed along the customer service process, augment financial services, and streamline business processes across teams like sales and marketing.”

For many companies existing outside of the technological hub, the efficiency gains to be made with AI should not be undervalued in 2025. They can be huge. However, it won’t be about making wholesale reductions in the workforce — “it’s about automating tasks that take a lot of staff time and redeploying people in more meaningful ways,” suggests Schindlinger.

To achieve this, boards will be focusing on providing strong safeguards around generative AI technologies. “Not only safeguards for the workforce but also around data security and privacy, particularly when it comes to customer data,” says Schindlinger. Boards will be asking ‘How can we do this in a way that doesn’t erode the trust of stakeholders?’ and ‘How can we do this in ways that increase our value creation?’.

Boards need an expert in the room next year, but Schindlinger warns directors to be careful of those claiming to be an ‘AI expert’: “In 2021, you would have found maybe a dozen AI experts but now there are thousands. Many know enough to sound really smart but don’t really know the technology, so you want to be cautious”. Boards will be looking for people who have been at the forefront of this technology for a very long time.

Alongside experts, we will see an increase in board members educating themselves to raise the basic competency level around AI. “The power of board members is asking straightforward questions that are actually very profound,” says Schindlinger. “By getting basic training, they’ll be able to ask thoughtful questions, but most importantly understand the answer when they hear it. ‘What does this technology do?’ and ‘How do we know it does that?’ Those might sound like simplistic questions but in the land of AI, that’s a very profound set of questions for each organization to answer as they tailor the tools to their individual needs.”

2. Increasing need for agility amid evolving cyber risk and geopolitical uncertainty

Directors will get experts into the boardroom to tackle the growing risks posed by cybersecurity, AI, and geopolitical uncertainty — but board agility will be the key.

“When boards look at their composition, they’ll be asking if they have the talent that’s fit for purpose. Not the talent that they needed last year, the talent they need three years from now,” explains Schindlinger. “That’s an important question, but it won’t be the whole answer. You can’t have an expert in everything on your board otherwise the board will be a thousand people big. Zero in on business strategy, bringing in outside help and expertise in the areas most pertinent to your business.”

Nowadays boards can get data on lots of things, but Schindlinger advises boards to remember exactly what it is your company is trying to accomplish: “As a researcher, we tend to fall into the trap of if we can measure it, then it must be important. It’s not always true. We live in an era of great volatility, uncertainty, complexity, and ambiguity. The right approach is to figure out the range of things that might derail the organization, and the probability of them happening along with the severity of impact if they do. These are the areas you focus on.”

As businesses identify growing areas of risk, it’s important to monitor them with real-time dashboards, says Schindlinger. “Don’t monitor them once a quarter in a written report, they need to be real-time. What happens from a period between January to April could be a lot, so you need something real-time to keep a constant eye on developments and maintain a current or future-focused approach. We may see the need for boards to touch base much more often. Things are going to be fluid as we’ll be moving way too fast to wait for the perfectly crafted board deck once a quarter.”

Schindlinger predicts that in 2025, organizations will be looking at key areas of risk and engaging in scenario planning on the ones that will have the greatest impact. “A practical example is cyber risk. It feels like we’ve been talking about cyber risk for fifteen years now, and there’s a reason, it just keeps getting worse. One of the nefarious sides of generative AI is that it’s really good at cyber attacks - for example, through social engineering and pretending to be human. Here we have to think of the likelihood of impact to the business and game it out.”

Scenario planning in 2025 around likely high-impact risks will allow boards to identify tools to put in place, data to track and the types of training to implement. Once a robust plan has been established for one core area of risk, businesses can be more agile adapting to multiple areas of risk. “If you’ve gamed out one area of risk, you’re generally able to game out any area of risk,” concluded Schindlinger.

3. Working to keep the board connected to mitigate talent and culture risk

While the development of company talent and coaching is handled at a managerial level, directors and boards will become increasingly interested in reconnecting with the culture of the organization. Throughout the report, “talent risk and culture risk came up many, many times,” states Schindlinger.

After the pandemic, many directors are familiar with the return to the office (RTO) concept — “But the truth is their workforce is not necessarily in that same position. A huge percentage of their workforce was hired during the pandemic, under lockdown conditions. So, for many of those people, there’s no such thing as RTO. They’ve never been in one. They don’t know what that culture previously looked like,” explains Schindlinger.

Today, we operate in a more global world but also a hybrid working world where the majority of the workforce is much younger than many recognize right now. “58% of the workforce is under the age of millennial,” explains Schindlinger. “For boards, this is no longer a conversation about how to please a small number of young employees. This is a major area of talent risk.”

The role of the board will be to “push, coach and probe management to ask: ‘What do we need to do differently?’, ‘What tools do we have in place to keep everyone connected?’” adds Schindlinger. “Employee data that can be seen on a dashboard, like retention and turnover rates, alongside the percentage of people promoted from within and active engagement in mentorship programs will become increasingly important to the board. These are all things that don’t require people to be together but might be really important to creating a sense of community.”

In 2025, boards will have a greater duty not to stifle innovation mentoring or talent coaching. Schindlinger foresees board members communicating more regularly with people at all levels of the organization, not just the C-suite.

4. Becoming more nimble as geopolitical tides shift

2024 observed a high watermark of elections where we saw big shifts. “As the pendulum swings back and forth, the arc of that swing is becoming more and more extreme,” notes Schindlinger. “That means the job for corporate boards is getting a lot harder.”

2025 marks a period where the political landscape looks far less clear for businesses than it has in the past. “Previously, no matter who was in office you could predict what happens next with reasonable accuracy; business conditions would typically be the same unless something major was happening with the economy. That has dramatically changed. Now you cannot count from one election cycle to another whether the landscape is going to remain consistent or be completely turned on its head,” Schindlinger observed.

Regarding issues such as tariffs, planning at the director and C-suite level will likely prove to be a challenge. “Tariffs raise questions about what’s going to happen to the cost of goods and the ability to sell goods,” says Schindlinger. “We also don’t know if there is going to be a new set of sanctions issued, and the major repercussions that can have on business.”

The geopolitical factors that are likely to have the biggest impact on companies are in ‘gray zones’ explains Schindlinger. “Things are happening quietly under the radar. ‘Gray zone’ activity is probably where directors need to focus much more attention, but it’s a lot harder because it’s not the headline news that is easy to find.”

Schindlinger suggests we’ll see boards needing to forge stronger relationships with state departments in their home country to understand geopolitical shifts. They will also likely engage in increased scenario planning. “Information and readiness are key to keeping employees safe first and foremost, but also keep suppliers and supply chains running. These are questions that directors are struggling to answer and trying to find ways to answer.”

Although there are many daunting risks approaching boards in the coming year, the opportunities can be huge. For future-thinking boards governance is ripe for disruption and a renewed sense of direction. Schindlinger concludes with one last piece of advice “Get better dashboards” — dashboards are essential to the solution of monitoring real-time risk, something that will prove invaluable to boards as they navigate through the unpredictable nature of 2025.