How boards can improve governance in an increasingly complex environment

Today’s rising complexity and rapid change demand clarity and alignment. Boards must therefore fundamentally rethink how they operate and govern.

In brief

• Non-executive directors of some of the world’s largest organisations reveal fundamental weaknesses in the current governance model.
• The increased burden of regulatory compliance, coupled with a vast volume of paperwork, is impeding directors’ capacity for future-focused thinking.
• Boards are missing out on opportunities to enhance their own efficiency and that of the organisation because of the underutilisation of AI.

The EY Board of the Future Study has revealed a governance model under severe strain. The study involved a series of in-depth interviews with non-executive directors (NEDs) of some of the world’s largest listed companies and uncovered growing challenges to governance with most interviews reporting difficulties in maintaining oversight across vast, multi-market operations while finding sufficient time for critical strategic foresight.

Participants also offered useful insights on how to address today’s governance risks and challenges. In this article, these insights are distilled into a set of six priority areas for change – the six step agenda for reimagining governance.

Step 1: Free up time to focus on the topics that matter most

Interviewees report being overwhelmed by the volume of information provided to them and the time commitments expected of them. As NEDs spend more time on regulatory adherence, their capacity for strategic foresight and operational understanding across the enterprise diminishes. The risk of unforeseen failures rises as a result. This, in turn, is driving a need for greater board efficiency to free up bandwidth to spend more time on strategic focus.

Actions for the board to consider: A number of actions can be taken to achieve improved efficiency. These include redesigning board packs so they provide a concise distillation of data into actionable insights. They also involve reshaping meeting agendas to focus on fewer, higher‑value topics. In addition, artificial intelligence (AI) can be used to free up board bandwidth for the highest‑value activities, while streamlining board processes and helping directors more easily absorb insights from lengthy board packs.

Step 2: Change ways of working to allow the board to deliver full value

Effective governance depends on boards and management teams jointly identifying problems and opportunities and determining the best path forward. However, many directors report receiving either overly filtered information that limits the scope of board judgement or an excessive volume data lacking in actionable insights. This, along with disconnects between directors and management teams, naturally impairs board effectiveness.

Actions for the board to consider: To overcome these obstacles, boards should seek to build relationships of trust with management teams to enable open and candid discussion of the issues facing the organisation. In addition, they should promote director professionalisation and give senior executives board experience to change their perceptions of the value boards can offer organisations.

Step 3: Engage the ecosystem to improve foresight and sensing

The current board model tends to be focused on historic data and compliance and is therefore ill-equipped for a future that is predicted to be more complex and more fragmented than ever. This failure to prioritise future-oriented thinking leads to reactive governance as the pace of change quickens. This, in turn, hinders a board’s ability to guide the company proactively, especially during dramatic shifts in the trading environment.

In addition, our study¹ identified how a lack of fresh, diverse perspectives and inadequate access to expertise on emerging topics are limiting boards’ ability to bring creative approaches to new challenges.

Actions for the board to consider: Boards should, therefore, engage in future scanning and scenario planning, harnessing AI. They should also look at their own composition and consider designating certain roles to have shorter duration or to have rotating experts to inject fresh perspectives at more frequent intervals.

Committee structures play a very valuable governance role, but they tend to be quite rigid which imposes limitations. Boards should, therefore, consider working in sprints with diverse teams to overcome these limitations.

Step 4: Encourage curiosity and critical challenge to prevent governance failures

There is a strange paradox at work in today’s boardrooms. Board effectiveness depends on independent thought, curiosity and critical challenge, yet internal cultural pressures and consensus-seeking often stifle debate. Boards can face subtle yet powerful pressures that can lead to groupthink. Most seriously, the need to achieve unanimous voting can create a cultural penalty for dissent. That culture can lead to a lack of critical challenge that produces institutional ignorance and ethical blind spots, significantly increasing the risk of corporate failures.

Actions for the board to consider: One way to address this is through widening the director pool by looking for diversity in age. For example, this can be done through next generation shadow boards and cognitive styles. Another is to engineer a contrarian mindset by creating a permissive environment and the psychological safety in which constructive debate and challenge can take place.

Step 5: Simplify and streamline governance mechanisms

The complex structures, numerous subsidiaries, and diverse jurisdictions of large global enterprises create governance challenges and make it difficult for NEDs to know with real confidence what is happening across the organisation and that they aren’t about to receive unpleasant surprises. This, in turn, can create a governance dissipation effect.

Many of the directors interviewed prioritise simplifying and streamlining governance mechanisms in response to these challenges. They see value in implementing consistent and standardised yet locally adaptable governance arrangements across the organisation.

Actions for the board to consider:  A key priority is closer engagement with key stakeholders and operations through direct exposure outside formal board meetings, such as curated site visits. This should be complemented by the strategic simplification of the organisation’s ownership arrangements and operational structures.

Step 6: Employ AI to augment board capabilities

Study participants readily acknowledged the underutilisation of AI by their organisation in relation to operational and governance matters. This means boards are missing out on opportunities for enhanced efficiency and deeper insights into enterprise governance and operations. It also leaves them ill-prepared to effectively oversee risks and opportunities presented by the technology.

Separate EY research reveals a growing focus on how AI is governed and the capabilities of directors. According to the EY report, what directors should know about the 2025 proxy season, the percentage of institutional investors prioritising responsible AI for engagement rose from 19% in 2024 to 36% in 2025.²

The use of AI by boards and the establishment of responsible AI frameworks within the enterprise are not separate, but integral. AI risks including those associated with reliability, explainability, compliance, ethics and transparency exist as much in the board as in the broader enterprise.

Boards should therefore consider establishing a responsible AI framework for the enterprise to increase confidence in the technology as well as to help the organisation to pursue AI initiatives at speed.

They should also harness AI as a catalyst for human-centric governance, augmenting – not replacing – the board’s responsibilities and using it for real-time, data-driven insights and predictive analytics for decision support.

Conclusion: Seize the opportunity to reimagine

The consensus among study participants is that the current governance model is under strain and without remedial action by boards will eventually buckle. However, recognising risks doesn’t necessarily translate into action to address them. Organisational inertia protects the status quo. It is therefore up to board chairs and NEDs to challenge this drive change before a crisis forces it upon them. This must go beyond incremental change and involve more significant reform, or even fundamental transformation, where required.

By embracing the six-step agenda for reimagining governance, boards can transform from sometimes reactive oversight-oriented bodies to agile, forward-looking strategic partners to the management team, helping to deliver sustained value creation in a dynamic global environment.