Key issues: IT governance

Overseeing a company's information technology activities is a significant challenge for directors. The pace of change in this area is rapid, the subject matter is complicated, and the highly technical language used to describe emerging technologies and evolving risks makes this a challenging area. And many companies are relying more and more on technology to get ahead, often prompting substantial changes in how they operate. On the other hand, cyber risk impacts nearly all companies and is top of mind for directors. All of these factors can make the board’s IT oversight responsibility appear harder than it is.

Our research, which included surveying 860 public company directors, indicates many board members are not confident in their board’s ability to effectively oversee their company's IT. Although many directors want to better comprehend the risks and opportunities related to IT, they sometimes don't have an adequate understanding of the subject to be truly effective in their oversight roles. In addition, boards often lack a well-defined process that satisfies their needs in this area. On the whole, this confluence of factors can create an “IT confidence gap” for many board members. Some of the factors contributing to this gap include:

  • Many directors grew up in a pre-digital era before the Internet and recent emerging IT trends.
  • Very few directors have IT backgrounds. (Less than 1% of Fortune 500 board members have been or are currently CIOs.)
  • Board time is at a premium. (Almost 60% of directors responding to the PwC Annual Corporate Directors Survey would like their boards to devote more time to IT oversight; only half of current board members spend more than 5% of their time on it.)
  • Technology continues to evolve at a rapid pace.

What can the board do to enhance the IT oversight role? Structured frameworks for IT professionals and management already exist; however, they are not designed with the board's oversight role in mind. To fill this void, PwC developed Directors and IT―What Works Best: A user-friendly board guide for effective information technology oversight, which introduces our IT Oversight Framework, to help boards figure out the most effective way to oversee IT at their companies.

 

PwC perspective

Don Keller “History has proven that a company's ability to manage and leverage new technologies can provide distinct business advantage or maintain its competitiveness. With emerging technologies such as the cloud, mobile computing devices and social media, directors need to consider if a company can get caught from behind by its competitors who more successfully embrace emerging trends.”
— Don Keller, Partner, Center for Board Governance

Other key issues

Learn what PwC has to say about IT Governance:

Additional information about IT Governance:

What are 860 directors thinking about corporate governance?
 
Watch the webcast archive on our
2012 Annual
Corporate Directors Survey to find out.