Change coming to board of the future – conference panelists

The board of the future will be affected by regulations, the need for diversity requirements, artificial intelligence and variable compensation, said panel speakers for the "Regrouping on the Quality of Board Decision Making" discussion at the WorldPensionSummit in The Hague on Oct. 11.

"What we identified is we need a board which is flexible and adaptable to the changes (so we have) the ability to harvest the opportunities (they) bring and the challenges (they) bring," said Adam Thompson, head of U.K. compliance and money laundering reporting officer at A$160 billion ($102 billion) Aware Super, Sydney.

"Regulation is also a massive (factor) that has gone through the legislative and regulatory journey from being a 'nice to have' to 'we have targets, we want to meet those targets'" Thompson said.

Angela Miller-May, chief investment officer of the $51.8 billion Illinois Municipal Retirement Fund, Oak Brook, noted that AI will be a part of the tool set needed by boards to gather information and make decisions.

She also expects to see more diversity, more women and more people of color to keep boards relevant. "Their concern will be more sustainability, more cybersecurity (and) political risk. I think they'll evolve with the evolution of the risks that they face, and that will be reflective of the time that they live in," Miller-May said.

The COVID-19 pandemic will also have a long-lasting impact on the boards of the future, "where they've been isolated, or that has lived through inflation and now it's maybe a little more conservative and wants to see more stability," she added.

The issues we are dealing with now will be much different from the issues of the future "because the world is going to be different. All we can depend on is change happening," she said.

Ignacio Calle, chief executive officer of Colombia-based SURA Asset Management, which has $170 billion in assets under management, said boards will be looking for a more balanced mix of hard and soft skills.

"Hard skills can (include) technology, cybersecurity. New asset classes are coming especially to Latin America, (and) we need to understand very well how to apply them," Calle said.

Soft skills include sociology and psychology, as boards seek leaders who are able to communicate effectively with people in the community. "When we come as pension funds with a lot of information. And when we communicate with these people, we're wrong. We use dry information, we use a lot of technical data," he said.

"We're destined to have variable compensation at the board level (where) if we perform very well, we (will) manage to have very good compensation so that's what we're doing," Calle added.