At a glance
• Boards face increasing regulatory scrutiny and stakeholder expectations.
• Global trade volatility, AI, and cybersecurity are reshaping risk priorities.
• Board composition must reflect the right mix of skills and experience.
• Effective governance requires adaptability and strong oversight under pressure.
Canada’s public company landscape is evolving rapidly, placing new demands and expectations on boards. Ongoing economic uncertainty due to tariffs and geopolitical events, regulatory changes, the emergence of AI, and cybersecurity threats call for many organizations to move away from being reactive. Instead, they need to anticipate changes to better position their organizations for the future.
The new risk environment
The pace of change is accelerating—particularly as global trade dynamics continue to shift—and not only do companies need to adapt quickly, but stakeholders are demanding more. Shareholders, employees, the public and regulators are placing additional emphasis on transparent, comprehensive disclosure as well as ensuring boards demonstrate effective oversight, requiring organizations to strengthen governance practices and be more proactive in how they identify, manage, and communicate risk.
The governance landscape is also changing, especially over the last few years. The momentum towards ESG reporting has eased in North America. Meanwhile, cybersecurity continues to be a focus, while AI is rapidly emerging as a new area of risk and opportunity.
External pressures companies face, including exposure to global trade volatility, will vary depending on the size and nature of the organization and the sector they operate in. Larger companies with global operations often face more complex requirements with a broader range of stakeholders, but they typically have more resources to manage these demands. On the other hand, smaller and mid-sized reporting issuers may encounter pressures that are more specific to their operations, while having fewer in-house resources.
Given the continuously evolving risk environment, boards must invest time and resources to build effective and proper processes to evaluate the risk environment specific to the company, ensure access to quality information, and bring on or develop board members with the right mix of skills and experience to strengthen oversight and strategic guidance. This may also include leveraging external advisors and prioritizing ongoing education for both management and the board.
Board composition
With the growing number of challenges public companies are facing, it’s important that boards have the right people. When selecting board members, companies must consider the unique mix of skill sets needed to deal with the range and complexity of trends and challenges that are affecting the company. This includes areas that have become core to board competencies, such as AI, cybersecurity, and global trade, or even board committees that weren’t previously required but are now. The ability to navigate these topics is essential for effective oversight and strategic guidance.
Growing regulatory burdens for boards aren’t new. As the environment keeps evolving, boards must adapt and ensure their oversight capabilities keep pace with emerging expectations and ongoing developments. This requires a commitment to continuous education and ensuring the board’s composition evolves to reflect changing regulatory expectations.
Where board oversight becomes critical
Due to shareholders and regulators’ increased expectations of board oversight diligence, there’s an increased demand for thorough compliance and enhanced monitoring. This shift requires organizations to be more diligent in their oversight strategies. Ensuring that the proper checks and balances are in place is vital for maintaining integrity and meeting both shareholder and regulatory expectations.
As businesses expand into new markets and navigate shifting global trade conditions, there are growing regulatory, legal, and audit risks, and thus, boards would require auditors who possess deep industry understanding and technical experience in their business to ensure quality and timely audits.
Another thing a board needs to consider is whether an audit firm has the capacity to serve them. This includes ensuring the right people with the right skills, the right expertise, and enough time capacity are involved in the audit to meet a company’s requirements. This starts with ensuring that the engagement partner and other key audit team members have sufficient capacity available to provide the time and attention needed. Capacity is also demonstrated through the ability to mobilize multi-disciplinary teams, leverage cross-border collaboration through a global network, and coordinate strong local teams that work together frequently and effectively to deliver consistent, high-quality outcomes.
Modern governance requirements
Boards play an essential role in ensuring strong oversight and guiding organizations through uncertainty. Resilience is an important quality for boards as they develop oversight models to address changing, evolving risks and challenges. Boards need to pivot if conditions or situations change. Focusing on resilience allows boards to maintain strong governance under pressure while adapting their oversight and strategy as circumstances change.
Key elements of modern governance include a focus on clear communication, open dialogue, and ongoing education. These factors help create an environment where governance can serve the needs of stakeholders. By continuously assessing and improving their oversight models, boards can better support their organizations.
Boards must also balance priorities while navigating time pressures. Rapid change requires boards to understand the risks and complexities relevant to the company, ensuring they have the resources with the appropriate time and skill sets to ensure proper governance. Formalization, including establishing clear KPIs, leveraging dashboards to monitor trends, and structuring the board agenda to focus on forward-looking risks and opportunities, can help boards stay ahead of change rather than reacting to it. Companies must balance their obligations and ensure robust governance practices are in place to meet filing deadlines, alongside other governance imperatives.
The bottom line
The challenges for public companies in Canada are rapidly evolving. To meet the demands of stakeholders, boards must embrace resilience and be ready to adapt to any situation. By prioritizing transparency and ensuring they have the right people and resources, they will position their organization for success.
How we can help
Our professionals have experience working with public companies to provide them with the services they need. We deliver high-quality audits, practical insights, and take a proactive approach to how we deliver our services. With the backing of a global network, we’re able to serve our clients doing business in Canada and across the globe. Contact us to learn how we can help your company.