Pessimism over the economy lessens, but Brexit, cyber security and diversity remain key issues for UK boards

London, 8 January 2018 – a survey of FTSE 350 companies out today finds economic pessimism gradually lifting as confidence in global and UK economic conditions starts to return despite continued concern about the impact of Brexit and an increase in the number of respondents citing Brexit as a principal risk. The latest FT-ICSA Boardroom Bellwether survey by ICSA: The Governance Institute in association with the Financial Times also reveals that concerns about cyber risk and boardroom diversity remain a worry for UK PLC.

The key findings of the winter 2017 survey, which canvasses the views of the FTSE 350 on the business environment and key governance issues such as board diversity, regulation and risk and compliance, are as follows:

  • UK economy: Expectations of improvement have returned to the levels seen in December 2016 (8%), up from 5% in summer 2017 – the lowest level since the surveys began in 2012 –, but down from the 13% that immediately preceded the EU Referendum and well below the 40% that was seen in the six months before that in winter 2015.
  • Global economy: Confidence is on the rise with 27% of respondents anticipating an improvement in the next twelve months, up from 16% in December 2016, and those anticipating a slight decline decreasing from 37% to 24%.
    ‘Economic confidence remains generally low, but we are starting to see signs of a recovery. Capital expenditure and economic confidence often go hand in hand and more respondents are anticipating an increase in Capex than at any time since our summer 2015 survey.’ (Peter Swabey, Policy and Research Director at ICSA: The Governance Institute)
  • Brexit: Just over half (51%) of respondents expect Brexit to cause some or significant damage to their business, marginally down from the summer 2017 survey (54%), but up from 45% in summer 2016 when the survey was carried out immediately before the EU Referendum vote.  
    ‘Some 18 months on, the impact of the UK’s vote to leave the EU continues to be felt with 51% of respondents rating Brexit as potentially damaging and none believing it will have a positive impact. Despite this only one respondent is considering moving it's head office or a substantial part of its business from the UK to the EU. This is particularly interesting given that Brexit is indicated as a principal risk by 43%, up from 34% in summer 2017.’ (Peter Swabey) 

The key governance findings include:

  • Risk management: Cyber risk remains the top risk management concern at 80% (legal risk and political risk follow at 56% each), with 90% of respondents revealing that their board is increasing spending on mitigation of cyber risk.
    ‘Unsurprisingly we are seeing an increase in the frequency with which boards or their committees consider exposure to cyber risk, with a quarter of respondents telling us that this happens at least quarterly and more than half of the rest at least twice a year. The 5% that are considering cyber risk less than annually might give shareholders cause for concern,’ says Peter.

    Tax transparency and the public expectation that companies will not engage in aggressive tax avoidance is a hot topic, with 86% of respondents disclosing that their board had discussed reputational or other risk around tax practices affecting their company.

    52% of respondents indicated that their boards felt that current policies and guidelines on sexual harassment in the workplace were fit for purpose, but some 33% of respondents did not know, which suggests that the matter has not been discussed at board level – it should be.

    ‘Sexual harassment claims emerging across all industries present businesses with a real reputational risk. Yet, people issues are still not on the top of the list in the boardroom conversation, and many senior executives have low understanding of risks associated with ineffective workforce planning, development and management. Boards urgently need to get a grasp on accurate and relevant people data, ensuring that HR has the remit and capability to deliver that insight.’ (Ksenia Zheltoukhova, Head of Research and Thought Leadership, CIPD)
  • Boardroom diversity: Progress towards more representative boards remains slow in spite of high-profile initiatives such as the Davies, Hampton-Alexander and Parker Reviews to improve gender, ethnic and cultural diversity. While gender diversity is showing signs of gradual improvement (71% of respondents rate their board as diverse in terms of gender, the highest figure since we started tracking it in 2012), ethnic diversity remains an area of concern with only 31% of respondents considering their board to be diverse and 53% believing that it is not. Furthermore, plans to develop a wide and diverse pool of ‘board-ready’ executives seem to be stagnating, with only 43% of respondents believing their pipeline is sufficient, a notable drop from 53% in summer 2017. This suggests that boards should play a more active role in managing their executive pipeline.

    ‘The changes to the UK Corporate Governance Code aim to improve succession planning practice through reporting on gender in the executive pipeline and board member contribution to long-term company performance. Company secretaries can influence improved board practices in these areas,’
    says David Styles, Director, Corporate Governance at the Financial Reporting Council.   

- Ends -

For further information, please contact Maria Brookes, Media Relations Manager:

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Notes to Editors:

  1. ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
  2. The Financial Times is one of the world’s leading business news organisations, recognised internationally for its authority, integrity and accuracy. In 2016 the FT passed a significant milestone in its digital transformation as digital and services revenues overtook print revenues for the first time. The FT has a combined paid print and digital circulation of almost 870,000 and makes 60% of revenues from its journalism.
  3. The full report is available to download at 
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