Henri Eliot: What should worry directors in 2016?
9:36 AM Tuesday Dec 15, 2015
– Mark Verbiest, chairman Spark, chairman of Transpower, a director of ANZ Bank New Zealand and Freightways.
1. The need to take a more dynamic approach to risk (and strategy) within the business.
As we are seeing at Spark, the pace of change is rapid, and that leads to more inherent risk within the business – and those risks are continually evolving. This means boards need to recalibrate their assessment of risk on a more frequent basis.
2. Cyber security – A topic that has massive focus at Spark given the importance of protecting customer and our own information. It is an issue that requires constant focus. New threats evolve all the time and we don’t know what we don’t know. Regular reporting and keeping up to date with the latest trends and preventative methods is critical.
3. Skills, education and retraining to cope with the change that is occurring.
Although some jobs will disappear, there are shortages of key skills in other areas. We are heading towards an environment where there needs to be much more direct participation by the private sector, as well as public involvement. Companies should see it makes sense to take a more active role in developing the workforce of the future, rather than just leaving it to the government.
4. The continuing challenge of the economics and scale of infrastructure requirements in New Zealand (not just in telecommunications).
This requires focus on innovation in execution as well as recognition that funding is not without cost.
– Tony Carter, Chairman Air New Zealand, Chairman of Fisher & Paykel Healthcare, a director of Fletcher Building and ANZ Bank New Zealand.
Overall I think we can be pretty positive about our prospects for next year.
We are lucky that we live in New Zealand. In terms of specific worries, three stand out for me. In no particular order they are:
1. The global economic situation is pretty volatile and we aren’t isolated from it. In particular as China is our largest trading market, we need to keep an eye on their economic performance.
<b.2.< b=””>The El Nino weather pattern has the prospect of a drought. Every recession in New Zealand has been preceded by a drought, so a country-wide dry period is worrying. That said, I understand the rural sector is much better positioned to respond to a long dry spell than previously.
3. Cyber security risk will only grow and our geographic isolation doesn’t provide any protection. Xompanies will need to invest more time and resource to mitigate this risk.
4. Our geographic isolation has always been seen as a bit of a negative. I suggest will become more of a positive in the future. We are in the Pacific rim and this century is certainly going to be the Pacific century whereas the previous one was the Atlantic one. As technology evolves, the world comes closer to us, which has to be a positive.
– Doug McKay, chairman BNZ, director of AMI Insurance, Genesis Energy and IAG (New Zealand)
1. Health and Safety. First and foremost, given legislative change, is to ensure Health and Safety is right up to scratch and use this opportunity to focus on risk more generally. Health and Safety is a platform to leverage improvements, processes and disciplines around risk and to move towards positive culture change.
2. Dealing with disruption. All my businesses face disruption threats and opportunities next year and we need to be nimble, agile, and adaptive to capitalise on these.
3. Growth and Innovation. If you’re not growing you are dying. The relentless search for profitable growth continues.
– Rob, Campbell, Chairman Summerset, Director of Turners and Growers and Precinct Properties..
Directors should never worry. If a director wakes up at night worrying they should move to another role.
We have responsibilities as a director for sure but we meet those and move on. Executives and staff have enough to cope with without worry-wart directors adding to the problem.
I adopt the Eldridge Cleaver principle to board members: “If you are not part of the solution you are part of the problem”.
2016 will be a busy year for boards and their directors. They will be focused on balancing revenue growth and managing risk but overall remain very positive.
Wishing all my readers a safe, relaxing and fun holiday season.