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Seven Hot Topics for Boards in 2014

Here's what CFOs need to know about what will be going on in boardrooms as they head into next year.

Performing the duties of a CFO demands a strong awareness of the board of directors’ priorities. The law firm Akin, Gump, Strauss, Hauer & Feld, for which advising boards is a major practice area, on Wednesday released its list of the top topics for directors in 2014. Here are seven of them:

1. Oversee strategic planning amid continuing fiscal uncertainty.
Gridlock in Washington is wreaking havoc on business planning, Akin Gump contends. It cites the federal government shutdown in October as a prime example, which was ended only by a kick-the-can-down-the-road approach that will require Congress to again address spending levels by Jan. 15 and the debt ceiling by Feb. 7.

“Fearing that ‘governing by crisis’ is becoming the new norm, the business community remains skeptical that any meaningful long-term solution to the nation’s fiscal woes will be reached before the country has to suffer through this fire drill again,” the law firm writes.

Adding to the uncertainty is growing concern over the Federal Reserve’s massive bond-buying program. Critics charge that the unprecedented stimulus effort may be creating asset bubbles, and the financial markets have reacted strongly to any news about the Fed’s future plans for the program.

The uncertainty is a likely cause of pervasive cash-hoarding in corporate America. A Sept. 28 article in The Wall Street Journal estimated that companies are sitting on $1.8 trillion in cash and other liquid assets. “While the profits of S&P 500 companies have doubled since June 2009 and are near a 60-year high, wages and salaries as a percentage of GDP have fallen to the lowest level on record, and corporate capital expenditures are about one-third the average in previous recoveries,” Akin Gump says, citing a Dec. 6 Dallas Morning News article.

2. Address cybersecurity.
A recent Ponemon Institute study found that cyber attacks on companies have leaped by an astonishing 42 percent this year compared with 2012.

In addition to potential lawsuits, damage to reputation and loss of customers, companies are facing increasing regulatory scrutiny over the adequacy of their data-security measures. The Federal Trade Commission has brought more than 40 actions against companies for data breaches, claiming that failures to prevent unauthorized access to consumers’ information constitute unfair or deceptive acts.

Akin Gump made several recommendations for directors. They should have a clear understanding of who is responsible for cybersecurity oversight; seek education, as rapid advances in information technology may make keeping on top of the issues a challenge; understand the company’s cybersecurity risk profile; and ensure the adequacy of the company’s insurance coverage for data breaches.

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