Key Takeaways:

• Most significant shifts in public company governance include expectations regarding: Board composition – i.e., skill levels and the balance of generalists and specialists; technology and the need for directors to stay ahead of emerging risks; and timely communication to and engagement with shareholders.
• Assessing director education and skill enhancement: The overall success of the company is the main indicator; adoption of leading practices and effective corporate communication suggest directors are staying educated.
• Solving tension points for dual investor/board member roles: Clear policies and procedures are essential to manage conflicts of interest, especially regarding time horizons and objectives.
• Benefits of active investors enhancing governance: Active investors can refresh board conversations, drive accountability, and foster value alignment through broad participation and routine evaluations.
• Generalist vs. specialist directors in the current environment: Future-focused directors need a wide range of overlapping experiences to ensure no single person dominates decision-making and to facilitate comprehensive checks and balances.

Key Areas of Focus:

• Adaptive Governance: A flexible, responsive approach to organizational oversight that has evolved from environmental management to broader applications across nonprofit and for-profit sectors, empowering organizations to maintain resilience in the face of rapid change.
• Innovation: Recognize that governance is dynamic and requires ongoing adaptation. It isn’t always about disruption; reimagining existing models can uncover new opportunities.
• Trust, Communication & Data Integrity: Transparent communication and reliable data are essential for effective governance and stakeholder confidence.
• Scenario Planning & Risk Assessment: Should be ongoing, integrated processes—not annual or one-time exercises—to help organizations better anticipate and navigate uncertainty.
• Board Actions: Encourage cross-functional collaboration, active stakeholder engagement, committee restructuring, learning cycles, and policy updates on a regular basis to reflect changing conditions. Boards need to shift from relying on intuition to leveraging intelligence and real-time data.

Resources:

• Embracing Adaptive Governance: Strengthening Nonprofit Resilience in a Time of Uncertainty
• How to Read Nonprofit Financial Statements: A Practical Guide
• Governance as Leadership: Reframing the Work of Nonprofit Boards

Key Areas of Focus:

• Value Proposition of Governance Structures: Distinguish between different governance models to make informed board decisions and expand your board opportunities.
• Board Skills Needs & Development: Continue to develop broad, adaptable skills to meet evolving board needs and corporate strategy.
• Due Diligence and Fit: Conduct thorough research on organizations before joining a board.
• Director Independence & Conflict of Interest: Maintain independence, know the risks of conflict of interests, and be able to constructively challenge in board discussions.
• Expanding Professional Acumen and Access to Governance Networks: Pursue ongoing education and build relationships to enhance governance expertise.

Resources:

• BDO’s Center for Corporate Governance: Resource center
• Mastering Private to Public Board Excellence: 3-session governance course over 3 weeks beginning October 29, 2025 – Register Today!

Human Resources and Workforce Impact:

• Bias in Automation: Ensure that automated HR processes undergo regular audits to identify and mitigate biases, particularly in candidate selection and hiring.
• Regulatory Oversight: Implement annual bias audits for automated employment decision tools to comply with regulations.
• Employee Surveillance: Review and update employee monitoring practices to ensure compliance with privacy regulations, and OSHA and HIPAA.

Regulatory Compliance and Legal Risks:

• Decentralized AI Regulation: Develop a comprehensive strategy to track and comply with AI regulations across different states.
• EU AI Act: Assess the impact of the EU AI Act on your operations and ensure compliance with its requirements, even if your systems are used within the EU.
• Terms of Service: Establish a process to monitor and review changes in terms of service for AI, other technology and communications tools, ensuring compliance and proper data usage.

Operational Resilience and Business Continuity:

• System Dependencies: Regularly evaluate AI systems for data representativeness and bias and adapt to real-time changes in company operations.
• Supply Chain Vulnerabilities: Conduct frequent audits of third-party components and vendors to identify and mitigate supply chain vulnerabilities.
• Cyber Threats: Update employee training programs to include awareness and prevention of deepfake scams and other sophisticated cyber threats.

Strategic Oversight and Accountability:

• Ethical Considerations: Form multidisciplinary task forces for AI adoption, including general counsel, to classify use cases based on risk levels.
• ROI and Uncertainty: Ask for detailed ROI estimates, timelines, and milestones for AI projects, considering the uncertainty and potential qualitative outcomes.
• Director Education: Encourage directors to engage in educational opportunities, such as NACD masterclasses and other governance-focused content, to enhance their understanding of AI governance.

Key Takeaways:

• Increased Agency and Responsibility: Boards are evolving to take on more agency and responsibility, often driven by a need to be the public face of the company, sign off on increasing disclosures, and develop compensation philosophies. This shift requires boards to embrace themselves as responsible and independent bodies capable of drawing informed conclusions and making decisions to sustain the organization.
• Long-term Strategic Interest: Boards must focus on long-term strategic interests to drive management’s accountability for corporate strategy. They need to further be focused on resilience and prepare for future challenges, balancing short-term risks with long-term goals.
• Use of Technology and Driving Information Expectations: Embracing technology, such as online board portals, can assist in managing increasing information and improving efficiency. Compelling management to use tools, such as graphic dashboard reporting and targeted executive summaries, that support reporting can simplify complex data, making it easier for board members to understand and act on critical issues.
• Orientation and Human Interaction: Effective onboarding and orientation of new board members are crucial. This includes personal interaction with management and other board members to build familiarity and trust, which is essential for the board's effectiveness.
• • Interplay with Management: Encouraging more interaction beyond executive management can inform and enhance the board's ability to oversee and guide the company. This includes vetting information from various sources and bringing outside perspectives to internal discussions.

Key Takeaways:

• Maintain Tone at the Top: Boards should confirm that their commitment to compliance and ethical behavior remains strong and consistent, even with the DOJ's pause on new FCPA investigations. This includes consistent messaging throughout the organization.
• Review Third-Party Risk Management: Companies should reassess their third-party risk management programs to make sure they are not inadvertently engaging with entities associated with transnational criminal organizations (TCOs) or terrorist organizations.
• Refresh Risk Assessment: Boards should ask management to perform a thorough risk assessment, with an intentional focus on operations.
• Geographical Focus: Companies should evaluate the culture and increased risk in regions where they operate, to maintain compliance and mitigate risks associated with these areas.
• Revisit Whistleblower Processes: Boards should ask to be kept appraised of all whistleblower reports and resolutions.
• Independent Investigations: In cases where there is a potential threat or pressure to pay a bribe, boards should facilitate independent investigations, involving outside counsel and forensic accountants to maintain objectivity and thoroughness.

Related Resources:

• FCPA Compliance: A Practical Guide for Identifying and Mitigating the Risk of Violations

Key Takeaways:

• AI can be viewed as a necessity for growth to drive both cost savings and revenue growth.
• Establishing a strong governance framework is crucial for managing risks associated with AI, such as data breaches and compliance with regulations like HIPAA and PCI.
• AI can be used both reactively to address immediate pain points and proactively to predict and optimize future business operations.
• While speed and scale are important, startups must ensure they do not compromise on compliance and governance, which are vital for sustainable growth.
• Developing an AI use policy is a best practice to guide internal and external applications of AI, ensuring responsible and effective usage.

Key Takeaways:   

• Have a clear understanding of entire supply chain – from where merchandise originates to where it is assembled or manufactured
• Gather and analyze transactional data to understand the financial impact of tariffs
• Review the customs triangle levers: tariff classification, country of origin, and value reported to customs
• Manage the tension between transfer pricing and customs valuation, as these both work in opposite directions
• Consider the long-term strategy of relocating manufacturing taking in factors such as: cost savings, labor rates, and potential free trade agreements
• Consider ethical sourcing and sustainability issues, such as compliance with forced labor prevention laws and environmental impact regulations
• Companies without in-house expertise to address complexity of global customs and trade issues may need to seek outside advisors with specialized knowledge to ensure informed strategic decision-making from both a legal and tax perspective

Resources:     

• BDO Talks Tariffs: Your 30 Min Monthly Briefing Webcast Series
• Customs & International Trade Services

Key Takeaways:

• Engaging with Stakeholders: Consider the importance of addressing every inbound inquiry, whether from activists, institutional investors, or shareholders. This involves methodical rigor and balanced engagement to understand and address the underlying concerns.
• Evaluating Board Performance: Allows for continuous evaluation of board performance, effectiveness, and skills. This includes assessing vulnerabilities and ensuring that the board is equipped to address current trends and macro-environmental impacts.
• Succession Planning: Nom/Gov committee plays a critical role in defining long-term succession objectives and plans and considering the viability of leadership in multiple levels of the organization for selection, retention, and refreshment/removal of the CEO, C-suite along with the “plus 1’s and 2’s (next level management) as well the board itself. This involves evaluating the needs of the organization and ensuring there are no critical skills gaps.
• Committee Structure and Allocation: Be accountable for reviewing and optimizing the allocation of responsibilities among all standing and potential other committees of the board. This includes considering rotations and refreshes based on a rationale thought process.
• 5. Corporate Resilience, Culture, and Talent Management: Stress the importance of focusing on the futureproofing of the company by ensuring good due diligence, strong corporate culture, and effective talent management across the organization. This includes considering evolving and shifting regulatory, competitor, and M&A landscapes while integrating new technologies and understanding their impact on people and culture.

To prepare for potential continuation of and/or changes in tax regulations, boards should be taking a vigilant watch and see approach and monitoring respective timing, effective dates and expiration dates:

• Confer with management to review financial models – e.g., changes in tax rates, deductions, credits, and exclusions.
• Get regular updates on tax policy changes to anticipate potential impacts on international and global tax strategies.
• Weigh the more likely scenario that legislative activity taken may allow more permanent actions to extend expiring provisions under current tax laws.
• Understand the organization's tax risk management policies, focusing on compliance, reporting, and consulting to assess how changes in tax law or procedure could affect the company’s risk profile.
• Consult with external tax advisors to stay abreast of tax policy changes and ensure coordination with the organization's internal tax team.