Key Takeaways:Each change to a business represents new strategic opportunities, but those changes also present new potential risk of and to the corporate strategy. Boards need to understand how the executive team approaches risk informed decision making to assess effectiveness. Streamlining and optimizing risk management require proper structure, process, and timing of risk assessment and mitigation activities and programs (e.g., insurance, internal audit, product recall, business continuity, cybersecurity, etc.) Corporate culture should include enterprise-wide risk awareness to consistently identify and address emerging and rapidly evolving risks (e.g., COVID, Russia, etc.). Macroeconomic trends in risk management should be part of regular dialogue with the executive team and include consideration of bringing in leading experts to educate and advise in particular areas of risk.Directors should challenge organizations to make appropriate investments in risk management while building incentives for managing rapidly evolving risks.

Key Takeaways:Audit committees can ensure smooth ICFR implementation by encouraging early planning, helping secure adequate resources, being familiar with management’s process to identify risks and management’s processes and controls in place to manage those risks.Boards should be particularly focused on controls addressing areas of the business that are inherently higher risk.IT systems are critical and thorough evaluations of the IT environment and the IT general controls should be done early to avoid the late detection of control flaws over systems and relevant data that may have pervasive impacts on the effectiveness of the entire internal control environment.Depending on the severity of any deficiencies, the board should understand the root cause of the deficiency and what management’s plans are to remediate; and further, hold management accountable to their remediation plans.Board should ensure that the control environment is continually reviewed and that management takes into account, among other things, changes in risks, policies and procedures that may require enhancements to the controls environment.

Key Takeaways:Today’s organizations are being called to contribute positively as part of the greater ecosystem, which is compelling directors to embrace the role of change catalysts and “intraprenuers.”People, as our greatest assets, need board directors to oversee the creation of work environments that value employees to allow them to ‘bring their whole selves to work.”Assembling a board composition strategy today needs to begin with a robust review of the skills matrix to ensure attributes such as curiosity, digital savviness and enterprise risk management, among others, are part of the consideration of current and future directors.

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Todd Simmens, National Managing Partner of Tax Risk Management, to discuss how the board’s oversight of corporate strategy and risk management would be remiss without an understanding and consideration of evolving global and domestic tax regulations anticipated to significantly impact decision-making at the board level. Key Takeaways:Companies are advised to continue to remain abreast of legislative activity to inform on-going scenario planning, inclusive of the tax department and appropriate advisors. Tax implications need to be considered early on in contemplation of transactions as well as operational decisions and human resource matters.Expectations for a robust tax bill in 2022 under the Biden Administration’s ‘Build Back Better’ plans may have lost sight of the power that individual members of the House and Senate can have.Mid-term U.S. political elections may put some of the more contentious progressive tax increases being considered on the back burner.With regard to Biden’s budget (aka the Green Book): As a reminder, certain of the Jobs Act provisions expire in 2025/2026; other provisions are permanent (e.g. Corporate Tax Rate increase from 21% to 28%, individual rates and capital gains as well as international regulations and policy changes such as the replacement of BEATS and onshoring of taxes) and would require legislation to enact tax changes.Internationally, companies are advised to be in tune to the OECD’s agendaThe IRS continues to experience operational challenges including staffing issues, processing, refund delays and extended communication response times. Filers are advised to communicate with the IRS using certified mail or other form to demonstrate proof on communications. It is the responsibility of board of directors to be very aware of what tax professionals have to say about what is going on at the business level. Resources:2022 BDO Tax Outlook Survey

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Mike Stiglianese, who serves as the Managing Director in BDO Consulting’s Technology Advisory Services Practice, discuss the SEC’s recently proposed rules on cybersecurity risk management, strategy, governance and incident disclosure and the impacts and considerations these rules may have on those charged with governance. Key Takeaways:The SEC proposed cybersecurity disclosure rules are intended to formalize currently expected disclosures around aspects of cybersecurity that are useful to investorsThe board will be required to provide disclosure about the cyber expertise that exists within the organization’s governance structureCybersecurity should be thought of and treated as necessary risk management processes and proceduresCyber incident response plans need to be planned in advanced, involve key stakeholders, be well thought out and practiced and be adjusted continually to reflect the changing risk landscapeDocumentation by the organization of the cyber risk management program is critical – including the identification, protection and disposal of data – along with testing of the programProcess and metrics shared with the board needs to be at the right level – By analogy: The audit committee wants to see the financial statements not the general ledger…Resources:SEC Proposes Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Dan Fuller, Managing Partner Tax ESG Strategy and Services Leader, discuss opportunities to align the board’s oversight of ESG strategy with taxation considerations to be truly impactful in corporate decisions-making in this evolving area. Key Takeaways:Where is the “T” in ESG? – Given that the majority of business transactions, including those involving ESG factors, have related tax impacts to consider, tax directors want to be included in the company’s evolving discussions around ESG and can be highly valuable to the board.For those companies outlining or updating their integration of tax into their ESG journey, three critical steps need to occur:Outline your approach to tax by defining regulatory compliance and interaction with tax authoritiesEstablish a robust tax governance, control and risk management framework to support the company’s sustainability strategyQuantify and provide qualitative context around an organization’s total tax liability to meet demand for transparencyFrom a governance and risk management lens, proper tax governance can ensure that there is appropriate oversight over an organization’s tax strategy and decisions, ensuring they align with overarching business objectives and stakeholder communications around tax reporting.Leverage the BDO ESG Tax Cipher to strengthen risk awareness, improve decision-making on risk mitigation, and increase transparency, accountability and strategy.Tax strategy can often be a “solution” in the ESG space – through credits, mitigation strategies, etc.Resources:Navigating the Intersection of Tax & ESGBDO Center of Excellence

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of Conscious Capitalism movement, as they discuss the importance of the board’s role in supporting conscious leadership and building a conscious business. Key Takeaways:The board’s role is critical in helping management define the purpose of the company to build and support a conscious organization – without it, C-suite efforts are likely to fail.Under the traditional business paradigm, companies invest much less in their futures and tend to take on massive risk when primarily focused on shareholder primacy, fiduciary duty and financial performance. A conscious business is set up to hit both purpose and performance benchmarks far into the future.Conversations at the board level around culture, purpose, and core values that align all stakeholders send a very strong signal to management and lead to a successful business strategy.ESG is an increasingly important topic in the boardroom but often seen as a compliance exercise or obligation rather than as an opportunity to build a conscious business with a defined purpose to truly generate and sustain long-term value creation for many stakeholders. Boards can play a very important role in helping their companies tackle the largest existential threats like climate change, income inequality and inclusion by being informed and being active in the conversations on these topics with company management.Succession planning is a critical role of the board especially when you’ve built a conscious business - selecting the wrong leader for a conscious company can destroy decades worth of work. Additional Resources:To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of the Conscious Capitalism movement, as he introduces the concept of Conscious Capitalism and the potential impacts of embracing the movement in your organization.Key Takeaways: Conscious Capitalism is a philosophy based on the belief that a better form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously advancing quality of life for people globally.Conscious Capitalism is grounded in four tenets: higher purpose, stakeholder integration, conscious leadership and conscious & caring cultureConscious Capitalism explores the possibility of embracing all the positives of capitalism while simultaneously reducing the negative impacts of business in the support and advancement of humanity.There are many benefits of being a conscious business that can counter some of the more significant issues facing companies today: increased employee engagement in the attraction and retention of talent; promotion of customer loyalty/advocacy; development of stronger supplier relationships; uplifting of communities, etc. While you may be successful operating your business in the traditional manner of maximizing profit and share price, broader stakeholders are increasingly demanding more and companies who do not embrace a conscious model increase the risk to their future business strategies and competitiveness.Additional Resources:To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Amanda Shpiner, Managing Director at Gasthalter & Co. LP, to discuss considerations for board communications as part of an overall governance strategy in the face of numerous disruptions impacting the business. Key Takeaways:• Boards have the responsibility to continuously monitor vulnerabilities and hold management accountable to address these via strategy and consistent, transparent communications with stakeholders• Communication to stakeholders needs to be thoughtful and clear – don’t underestimate the power of the varied traditional and social media channels, engagement and stakeholder polling – to differentiate from your industry peer set• Just because you may not have a complete plan in place to address an issue, it should not hold you back from communicating objectives and your thinking on the actions to undertake to achieve them• Activist positions are usually very well thought out with significant research and analysis behind them; company boards/management have day jobs and these fights can be extremely time consuming and expensive • Activism is morphing from perceived “corporate raiders” to “engaged shareowners/investors” for investors who hold their positions for long periods with a mission to change companies for the better through policies and performance enhancements• When faced with an activist challenge (e.g., 13D filing), speed of response is critical and requires a pre-planned approach based quality of continuous monitoring; you only have one chance to make a first impression to stakeholders• Current target areas for activists: corporate governance and perceived entrenchment of the board; operating performance; innovation to remain relevant; ability to tie ESG factors to bottom line over the long term; and management of supply chain challenges

Key Takeaways:• Sustainability is the “maturing” of ESG factors crossing over from government regulation to voluntary corporate reporting to becoming commonplace within organizations.• Sustainability has moved across the threshold into mainstream global commerce as investors understand that issues of sustainability have financial implications and dictate risks/opportunities that companies have from a business point of view.• Companies need to truly understand their shareholder base and be intentional in pursuing dialogue and engagement with investors – including not only institutional but also “activists” who often truly are speaking the language of business and are paying close attention to business issues impacting the company. • It is much easier to be a start-up and focus immediately on sustainable strategy than reinvent core competencies based on trendlines, but that innovation is what is required of today’s boards (“how you deliver what you are good at in a different way”).• Convergence of sustainability reporting standards will necessitate “integrated” reporting within financial statements and put pressure on the management to demand performance AND ensure the integrity of controls over the information provided to the market • The tools to measure/manage sustainability issues have historically been poor – however, as enterprise resources platforms evolve to address accounting complexity and reporting standards converge to provide a common compliance language, this will drive broader accountability and better information for stakeholders.• Next set of issues in focus: Human Capital vs. People Operations - However you choose to phrase, DEI, health/safety and labor conditions – companies need to focus on the employee engagement environments they are creating as these have a direct impact on business success. • As corporate responsibility shifts from reputational risk to a business imperative there is significant scrutiny by investors and the regulatory community that is forcing communication within the company regarding needed changes in controls/ policies/ procedures to accommodate sustainability and financial disclosures fully into integrated reporting that need to be a timely area of focus for the board.• Boards have responsibility for prioritization around what the company needs to “lean in on” – not a check the box, get an award, enhance my ratings play… this requires continual education that translates into deep thoughts on what is impacting my business to best drive strategy and value.Access: • Changing Business from the Inside Out: A Treehugger's Guide to Working in Corporations• Persefoni – Climate Management Accounting Platform• BDO’s ESG Center of Excellence