Corporate Director 12 Month Business Outlook Drops Amid Growing Signs of Economic Headwinds According to Diligent Institute Survey

April 12, 2023 at 08:00 AM EDT

On average corporate directors rate their 12 month business forecast a 5.84 out of 10, a 7% month over month decline

Thirty-five percent of directors expect conditions to deteriorate in the next 12 months, with slowing demand, heightened geopolitical risks and the Fed's continued tightening through the latest bank run listed as contributing factors, according to Diligent. New insights from Diligent Institute and Corporate Board Member shine light on the declining outlook of corporate directors at the close of the first fiscal quarter.

“Today’s corporate directors are facing an ever-evolving set of risks, from inflation and rising interest rates to keeping pace with digital transformation and overseeing non-financial performance indicators like sustainability and cyber risk,” said Dottie Schindlinger, Executive Director of Diligent Institute. “In our conversations with corporate leaders, we’ve found that organizations leveraging software to aggregate risk information into a single source of truth are able to provide executive management and the board with the insights they need to make confident, data-driven decisions.”

According to March 2023 findings from the Director Confidence Index, a monthly survey of 185 U.S. public company board members, directors’ rating of current business conditions also regressed by 5% in March, largely due to the recent bank crisis.

Findings over the past quarter include:

Directors’ outlook of future and current business conditions declines in March.

35% of directors expect conditions to deteriorate in the next 12 months, up from 33% in February. On average, corporate directors rate their forecast for business 12 months out a 5.84 out of 10, a 7% decline from the prior month (6.28).

Directors’ rating of current business conditions regressed by 5% to 5.84 in March from 6.16 in February, largely due to the recent bank crisis.

The Fed’s raising of interest rates is a top concern.

Overall, directors rate the impact of the Fed’s policy on their company’s ability to compete a 6 out of 10.

This aligns with findings from Diligent Institute’s Corporate Sentiment Tracker, an AI-powered tool monitoring the issues corporate leaders are speaking about in the news. Currently, “banking,” and “economic risk” are among the top issues being discussed publicly.

Boards need more insight into their business’ cyber and tech strategies.

When asked which areas they need more training or guidance in, directors say they feel relatively underprepared when it comes to overseeing cyber risk, with roughly 46% saying they want more training, education or guidance in this area.

Two-thirds of directors answered they want more insight into their business’ tech and digital strategy, indicating there is a lack of information flow around this area to the board.

“The good news amidst all that is the majority of directors continue to expect these challenges to be short-lived,” said Melanie Nolen, research editor for Corporate Board Member. “So, while we’re seeing some regression in optimism for the second half of the year, now that the Fed has refuted the idea of a rate cut in 2023, we continue to hear that strong fundamentals and heightened diligence among companies in navigating the current environment will support a strong recovery into 2024.”

To learn more about how Diligent supports organizations with a holistic view of their governance, risk, compliance, audit and ESG practices, visit diligent.com.

About Diligent Institute

Founded in 2018, Diligent Institute acts independently as the global corporate governance research arm and think tank of Diligent Corporation. Diligent Institute informs, educates, and connects leaders to champion modern governance through original, cutting-edge research, certifications and educational programs, networking opportunities and award and recognition programs. Learn more at diligentinstitute.com.

About Diligent

Diligent is the global leader in modern governance, providing SaaS solutions across governance, risk, compliance, audit and ESG. Empowering more than 1 million users and 700,000 board members with a holistic view of their organization’s GRC practices so they can make better decisions, faster. No matter the challenge. Learn more at diligent.com.

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About Corporate Board Member

Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq. Learn more at BoardMember.com.