How boards should rethink governance priorities in a world of constant change

Geopolitics is the most disruptive of board priorities, rising quickly up the board agenda as conflicts take center stage and government policies focus more on national security goals than purely economic ones. In 2021, only 26% of boards took actions prompted by geopolitics; by 2025, that number grew to 76%.¹

The EY-Parthenon 2026 Geostrategic Outlook highlights how state interventionism is shaping business, with AI and energy emerging as critical assets and demand growing for natural resources to support digital infrastructure – an issue that is likely to escalate.²

Our interviewees noted that leading boards had elevated geopolitics from a risk function to a strategic function, with geopolitical intelligence being used as a lens through which to view investment decisions, operating models and value creation strategies.

The EY report The five habits of successful Geostrategists makes clear that geostrategy has become a competitive capability. It highlights approaches that enable organizations to anticipate disruption, capture emerging opportunities and build resilience in an increasingly complex landscape.

1. Adapt supply chains to geopolitical realities

Rather than reacting after disruptions occur, diversify sourcing, production and logistics footprints to balance strategic resilience with efficiency. Our interviewees advised that boards hunt out major vulnerabilities, as well as preparing to be opportunistic.

Famke Krumbmüller, EY-Parthenon Geostrategic Business Group Leader, highlighted an example that requires action at speed but prior preparation. “Suddenly, your main competitor from another geography will not have access to your key home market anymore because public procurement rules have changed – be ready to seize that moment.”

2. Build political risk analysis into investment decisions

Evaluate political and policy alignment up front so that deals remain sound as leaders and governments shift positions.

3. Prepare for the unexpected

Leading boards undertake structured scenario planning, which builds early warning and crisis response capabilities. This allows them to minimize operational and reputational damage even when events escalate.

4. Regularly engage the board on geostrategy

While board focus on geostrategy is increasing, many still address it infrequently. A shared understanding and regular assessments are essential.

5. Determine who has a seat at the geostrategy table – and who needs one

Effective organizations clearly assign ownership. They establish defined leadership responsibility and cross-functional coordination, ensuring that geopolitical insight translates into coherent action rather than fragmented responses.

Our interviewees highlighted the audit committee’s role in exploring how internal audit can bring emerging risks into strategy conversations, and how scenario planning and subsequent decision-making need a variety of perspectives.

By integrating these five habits into their governance approach, boards can help organizations create the right foundations to capitalize on the opportunities that shifting geopolitics bring.

Innovation is not optional; it is a strategic capability that helps organizations respond to disruption, meet changing customer expectations, capitalize on rapid technological change, and compete and evolve.

AI and emerging technologies are central to innovation today. AI is a transformative force that has huge potential to improve decision-making and automate processes.

However, one message that comes through clearly from interviews for this report is the need to avoid the AI frenzy and “fear of missing out” (FOMO). There is a real risk that an excessive focus on AI diverts investment from true innovations, acting as a drag on long-term competitiveness.

As Iain Burnet, EY Asia-Pacific Consulting Managing Partner warned “If you do not approach it through a strategic lens, AI may become “digital popcorn,” popping up everywhere in the organization without having a structural, longer-term impact.”

New technologies are now so embedded and interconnected across the organization and the broader ecosystem that they underpin every aspect of the enterprise. However, as reliance increases, so does systemic risk.

Major companies that have been in the spotlight serve as high-profile warnings that this issue needs to be taken very seriously. Impact and oversight extend beyond IT to include finance, procurement, operations and internal audit. Large-scale technology changes, M&A and expansion into new markets also create broader cyber risks from systems integration or talent availability.

Organizations understand that to protect financial resilience and trust, the issue needs stronger governance, proactive detection and cross-functional collaboration, and they are increasingly elevating cybersecurity to the boardroom. As Lutz Naake, Assurance Technology Risk Partner, EY GmbH & Co. KG Wirtschaftsprüfungsgesellschaft, explains, “The financial services sector leads best practices in managing cybersecurity risks, thanks to regulatory drivers such as the EU’s Digital Operational Resilience Act (DORA). Other sectors need to catch up quickly.”

Board cybersecurity oversight usually sits with the audit committee (via EY.com US), though structures may need reassessing to ensure that cyber risk, culture and risk appetite receive appropriate attention. Quarterly cycles are too slow for rapidly evolving cyber risks, and dynamic information sharing is vital.

Swift decision-making is easier from a place of education and understanding. Changing mindsets on cybersecurity from compliance to curiosity may require directors to admit that they do not have the necessary expertise and to proactively seek out training programs, bring in outside experts and run simulations as effective responses to build knowledge. More than half (58%) of Fortune 100 companies (via EY.com US) report using simulations, tabletop exercises or response-readiness tests in this area – up from just 3% in 2019.

When embedded into core governance processes, cybersecurity oversight strengthens organizational resilience. Alignment with recognized frameworks such as those provided by the National Institute of Standards and Technology (NIST) or the International Organization for Standardization (ISO) is becoming standard practice, helping demonstrate risk is being managed with rigor and strategic intent to regulators and investors.

EY research – such as the long-term value surveys – shows that companies embedding sustainability into their strategy are more than 40% more confident than their peers in future performance, are better positioned for growth and innovation, and more likely to strengthen investor trust, access capital and respond to rising stakeholder expectations.

However, with the easy wins delivered, the next steps require more fundamental organizational change in the face of pressured budgets. Boards must step up their role as challengers, setting guardrails and supporting the executive team to balance the trade-offs between short-term profit and long-term viability.

The EY Sustainable value study shows that 41% of organizations want significant improvement in the integration of sustainability goals with strategy and finance. It demonstrates how the board, Chief Sustainability Officer (CSO) and Chief Financial Officer (CFO) can use collaboration, empathy and storytelling to embed sustainability strategy with the company’s growth ambitions.

Given the close connection between sustainability and long-term value creation, it is critical that boards consider sustainability as a material financial consideration when reviewing investment decisions. Boards can incentivize positive progress through setting targets, regular monitoring and linking sustainability performance with executive remuneration plans.

If you are feeling overwhelmed by the sheer scale of work required to manage these board priorities, you are not alone. In developing the EY Board of the Future (pdf) Part 1 study, we interviewed 21 nonexecutive directors³ from some of the world’s largest companies; they described a governance model under strain.

The directors reported feeling overloaded and struggling to maintain comprehensive oversight across vast, multimarket operations, while still finding sufficient time for critical strategic foresight. Even those with a positive viewpoint acknowledge the growing challenges of governance.

They also offered important insights that yielded six priority areas for change, which the report translated into the “6E Agenda.”

Since the global EY organization launched this approach, many directors in our network have commented on how the report articulated something they have felt for a while: The current governance system was not designed for the NAVI world. The 6E model suggests how to think about governance today and provides practical considerations for change.

Elevate efficiency: The increasing workloads and regulatory demands faced by boards drive the need for greater efficiency to free up bandwidth and allow more time for strategic focus. Boards should pursue pre-meeting engagement, adopt new technologies, streamline processes and focus agendas on fewer, high-value topics.

Enhance effectiveness: Suboptimal dynamics and a lack of trust can mean executive teams miss opportunities to benefit from their board’s counsel. Key actions include deliberately building trust, promoting director professionalization, and establishing explicit board-management expectations.

Exercise foresight: To address the lack of opportunity for future-oriented thinking, boards should engage with the external ecosystem, systematize scenario planning, consider flexible meeting agendas, adopt more dynamic approaches to rotation and composition, work in sprints, and harness AI to enhance strategic dialogue.

Encourage independence: Board effectiveness depends on independent thought and critical challenge. However, internal cultural pressures and consensus-seeking often stifle debate, risking governance failures. To drive robust oversight, boards should cultivate their own view of risk, seek independent information sources, and proactively engineer a contrarian mindset.

Engineer simplicity: Complex enterprises create governance challenges and make it difficult to know with real confidence what is happening across the organization. Boards should consider principles-based frameworks that balance global consistency with local adaptation, increase their direct exposure to operations and simplify organizational structures.

Employ AI: Despite AI’s transformative potential, boards fully acknowledge that they are underutilizing the technology in relation to governance matters. Boards should oversee the adoption of responsible AI frameworks and foster human-centric governance augmented by AI.

Looking to the future, the board composition and capabilities must evolve. Long-term predictions suggest that boards may mix human directors with AI agents, and the tension between specialist and generalist skills could shift. However, the board’s mentoring role for management will remain essential.

Conclusion

As boards move through 2026, the themes of increasing geopolitical tension, leadership and culture, innovation, cybersecurity, and sustainability remain central to shaping organizational performance. Yet, in an increasingly NAVI environment, the question is how they equip themselves to oversee these issues in a way that is connected, future-oriented and strategically coherent. 

However, many directors and the governance model itself are under considerable strain. To avoid being overwhelmed, and carve out time for strategic thinking, boards should use the 6E agenda from the EY Board of the Future study, beginning a virtuous circle of improvement.

By repurposing and redirecting energy toward curiosity and thinking differently, boards can make better decisions in circumstances where the way forward may seem impossible to identify with certainty. 

Summary

Accelerating disruption is reshaping the actions boards should take and, more critically, how they govern their organizations. Geopolitics, innovation, cybersecurity, sustainability, and leadership remain the defining challenges but today’s board needs a more dynamic, connected approach. A focus on governance itself becomes not just a structural necessity, but a strategic advantage.