What to Watch For in 2025

In the first Savvy Director post of 2025, we’ll take a look at some of the challenges and opportunities our boards may be facing as the year unfolds.

Of course, the impact of external pressures and governance trends varies considerably based on factors like your industry sector, type of organization, and geographic location. That means that some of the items we cover here will apply to your situation, and others won’t — at least not directly.

Still, it’s a good idea for all directors — regardless of whether your organization is for-profit, non-profit, co-operative, public sector, or any other configuration — to at least be aware of these big picture trends, and to consider how they could be tweaked to adapt to your board’s reality.

With that in mind, before the new year gets going in earnest, let’s take a moment to consider what might be in store for us. We’ll start with a look at external pressures, then turn our attention to technology developments, people issues within our organizations, and finally our boards.

For those of you who’d like to take a deeper dive, check out the excellent articles listed in the Resources section below. We’ve sprinkled quotes from these resources throughout this post to give you a flavour of what the experts are saying.

External Pressures

Let’s start by taking a look at how the ever-changing world around us is impacting our organizations and our boards. Over the past few years, the external environment has been described as volatile, uncertain, complex, and ambiguous (VUCA). In 2025, it’s likely to be even more so.

Shifting economic conditions was the most selected trend among this year’s respondents, largely driven by persistent uncertainty stemming from geopolitical volatility, which was also ranked among the top five trends. — NACD’s 2025 Trends and Priorities Survey

Geopolitical Developments

Unless you’ve been living in a cave, you’re aware of changes in governments accompanied by a global shift of public sentiment towards the right of the political spectrum. Not to mention international conflicts that threaten to spread outwards.

The question is — how could politics influence your boardroom? That’s a question only you and your fellow directors can answer. Your organization may not be affected directly, but what indirect effects rippling outward might threaten to upset or even capsize your board — or perhaps offer new opportunities?

A key question for boards to consider, as outlined in the NACD article Directors Should Prepare to Address Five Board Dilemmas in 2025, is whether or not to engage in the public discussion around social and political issues. Should your organization take a position or remain silent? The best answer depends on your situation.

Economic Shifts

The economic forecast for 2025 can best be described as uncertain. The geopolitical considerations mentioned above give rise to some of that uncertainty — the rise of protectionism, the threat of tariffs, supply chain disruptions, migration, etc.

There are other factors at play as well. Some of the more obvious come to mind, such as an overly exuberant stock market, falling (or maybe rising?) interest rates, the unrelenting march of demographic change, disruption due to technological advancement, labour shortages, etc.

Which of these shifts will impact your organization and investments, and how? Is your board paying attention and getting ready? Are your strategy and your investment policy flexible enough to respond to rapid changes in economic conditions, or are you so committed to your strategic plan that you fail to recognize if it’s no longer relevant?

Regulatory Burden

Regardless of what sector your board operates in, chances are you’re subject to increasing regulatory oversight. That means your board needs to be more aware of compliance issues than ever before.

You’ll want to ensure that your board is fulfilling its duty to oversee the organization’s compliance with all relevant laws and regulations. That includes being aware of new regulations and changes to existing regulations.

In 2025, depending on your industry and jurisdiction, you can anticipate new or updated regulations pertaining to artificial intelligence (AI) as well as ESG reporting requirements.

Regulatory bodies worldwide are intensifying their focus on ESG reporting, making it a crucial aspect of compliance and corporate responsibility. — Directors’ Institute

As AI solutions proliferate, so do the regulations attempting to govern its use. Different regions have taken distinct approaches to AI regulation. — Diligent

ESG Considerations

The emphasis on Environmental, Social and Governance issues in the boardroom will continue in 2025. However, in response to pushback against ESG, you may find the more neutral word sustainability will be increasingly used.

Even if your organization is not subject to current regulations around sustainability, climate change, and the environment, it may still be the right time for your board to consider the risks — and opportunities — that these trends bring to your organization. Does your current strategy properly reflect these realities? Has sustainability been integrated into your operations?

ESG considerations have become central to corporate strategies … Companies are increasingly integrating ESG criteria into their core operations, recognizing that sustainable practices drive long-term profitability and shareholder value. — Directors’ Institute

Companies that embed sustainability into their strategies are better positioned for success. They can spot growth potential in identifying and managing ESG issues. — PwC

Stakeholder Expectations

Boards can continue to expect increased scrutiny from stakeholders on all sides — whether it be in the form of shareholder activism, employee demands, or community involvement. Over the course of the coming year, perhaps your board should consider whether or not it has adequate listening posts in place to monitor what stakeholders are saying about the organization.

Stakeholder capitalism is reshaping corporate governance by broadening its focus to include the interests of all stakeholders — employees, communities, customers, suppliers, and shareholders. This inclusive business model promotes a more sustainable and equitable approach to value creation. — Directors’ Institute

Technology and Data

Another area that will continue to impact boards in 2025 is the use of more and more sophisticated technology, including digital tools to streamline processes inside the boardroom itself.

Technology is already omnipresent in many boardrooms. For years, tools like board portals have streamlined collaboration and fostered security and transparency. In 2025, Generative AI is posed to transform the boardroom … — Diligent

Artificial Intelligence (AI)

If your board hasn’t already discussed how AI can be used in your organization, you probably will in 2025. The impact of AI on organizations of every type, in every sector, in every jurisdiction is hard to escape.

AI may, indeed, be posed to transform your organization’s operations in 2025 — as many experts are predicting. Around your board table you can expect discussions to include how to make sure AI risk is balanced with reward. The last thing you want is for your organization to be left behind in this fast-moving area.

At the same time, make sure your board is aware that new regulations to govern AI are forthcoming in most jurisdictions. Encourage your organization to develop an AI Workplan or Framework and an AI policy if you don’t already have one.

No consideration of AI is complete without discussion of data quality. In the coming year, make sure that your board asks relevant questions about how your organization’s data is structured and governed to ensure privacy is protected and data is used fairly and responsibly.

Cybersecurity Concerns

Cybersecurity should remain top of mind for every board in 2025. Not only does global conflict lead to ever more sophisticated cybercrime, but the rise of AI creates new opportunities for cyber criminals. Robust cyber security is more critical than ever — and cybersecurity insurance is more expensive than ever, too!

Cybersecurity has become a vital component of modern corporate governance, driven by the increasing frequency and complexity of cyber threats. With cyber incidents potentially causing significant financial and reputational damage, boards are expected to have a robust understanding of cyber risks and implement comprehensive strategies to mitigate them. — Directors’ Institute

Within the Organization

Organizations everywhere are increasingly subject to pressures from demographic shifts, disruptive innovations, and cultural change. These factors are apt to keep your board on its toes in 2025.

Succession and Talent Management

You can expect a continued emphasis on succession planning and talent development in 2025. As advances in technology cause disruption and spur the development of new business models, organizations are coming face-to-face with the need to attract new talent who bring a modern set of skills and a flexible mindset to the workplace.

Depending on your leadership team, your board may find itself reflecting about whether you have the right team in place to guide this transition.  

The workplace will transform over the coming years. ... Businesses are grappling with significant demographic shifts as baby boomers near retirement and new generations take their place. … Companies should start nurturing young talent by considering which tools and structures can facilitate innovation and mentoring. — Diligent

Corporate Culture

Experts seem to agree these days that boards should be actively engaged in monitoring culture throughout the organization. In 2025 and beyond, the board’s obligation to understand and oversee the organizational culture will become increasingly important to stakeholders, particularly with respect to ensuring ethics and integrity. Some industries are beginning to see increased regulatory oversight in this area.

A positive culture can be a great asset to the organization, just as a weak one can be a risk to reputation and performance. Make sure that your board is setting the right tone at the top and has some methods in place to get insight into the corporate culture.

Have a laser-like focus on the tone set by senior management and zero tolerance for conduct that is inconsistent with the company’s values and ethical standards, including any “code of silence” around such conduct. Be sensitive to early warning signs and verify that the company has robust whistleblower mechanisms in place … — KPMG

The Board

Lastly, let’s take a look at some 2025 trends in how the board conducts itself.

Savvy Director readers have told us that there are so many governance issues demanding their attention that it’s becoming harder to focus on what’s most important — the organization and its mission. Our readers are not alone — board directors everywhere are saying the same thing.

How can boards remain focused on mission-critical issues for the company as the scope of their governance continues to expand? … In addition to traditional board-level issues, an increase in the number of disclosures required by regulators, topics flagged by stakeholders, and crisis-like disruptions often result in packed agendas, demands for more committee attention, and ultimately the potential for insufficient attention to mission-critical matters. — NACD

Making the Best Use of Your Time

Amid these increasing expectations, a rigorous focus on how the board allocates its time and resources is more important than ever. In 2025, your board may want to take a look at how it’s using key tools like the agenda, the annual calendar, and the board retreat. Another avenue to consider is adopting AI tools to increase board efficiency and effectiveness where appropriate.

Board Evaluation

To help ensure that your board is as effective as it can be, maybe this is the year to conduct an external review and develop an action plan. A robust board evaluation process can help answer questions like:

• Are the right committees in place and are they fulfilling their mandates?
• Is the board composition optimal?
• Are you recruiting the right directors that bring to the table a good balance of subject matter expertise and general leadership experience?  
• Are all directors adding value to the board?
• Are board meetings engaging and productive?
• Are we spending enough time on the right things?

Your Takeaway for 2025

2025 is shaping up to be a year defined by uncertainty. From market volatility to technological disruption and geopolitical realignments, the risks facing organizations are multifaceted and deeply interconnected. Boards that govern effectively will make resilience a centrepiece of their approach — not as a buzzword, but as a strategic priority. Resilience doesn’t come from knowing the future; it comes from being prepared for the unexpected. — Helle Bank Jørgensen

Resources:

• 2025: A Crossroads, Not a Crisis. Helle Bank Jørgensen, GCB.D, NACD.DC. LinkedIn. December 2024.
• On the 2025 board agenda. KPMG Board Leadership Center. December 2024.
• Directors Should Prepare to Address Five Board Dilemmas in 2025. Friso van der Oord and Ted Sikora. NACD. December 2024.
• Top corporate governance trends for 2025 & beyond. Kezia Farnham. Diligent. November 2024.
• Future of Corporate Governance: 10 Key Defining Trends. Director’s Institute. October 2024.
• What’s important to the board in 2025. Leadership Insights. © 2017-2024 PwC.

Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online membership with practical tools for board directors who choose a growth mindset.

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