Board Stewardship: What does it mean to govern in the age of uncertainty?

01

Reaffirm the long-term stewardship role of the board

In today’s volatile business landscape, boards are overseeing an increasingly complex web of risks, demanding that boards become comfortable with the uncomfortable, champions of long-term organisational health and responsible proponents of innovation in the face of uncertainty. To do this, they must think beyond immediate concerns such as quarterly results and political headlines. Yet WTW’s 2025 Board Stewardship Survey found that 40% of board members don’t spend enough time on strategic planning for the long-term with time largely on financial results and reporting. And only 23% of executives are confident their organisation’s strategy will remain resilient to risks that might emerge in the next 10 years (WTW’s 2024 Emerging and Interconnected Risks Survey).

The same survey of executives found the top five emerging risks for organisations were AI, Cyber, Geopolitical, Climate transition and regulatory changes (which aligns to the top 5 risks that boards told us keep them awake at night). Furthermore, WTW's 2025 Directors and Officers Liability Survey found that Health and Safety was the top-ranked risk facing directors globally (for the second year running), pointing to the increasing importance of managing both physical and mental wellbeing and the board’s human capital governance role. Ultimately, the nature and level of risks will differ by company and individual, but what is consistent for boards is the challenge of how these risks (and opportunities) interact. For example:

• How will geopolitics impact the green transition and the risks associated for our business? (WTW’s Global Clean Energy Survey 2025 Report showed that 79% named supply chain disruption and 78% geopolitical issues among the greatest risks to their clean energy strategy.)
• How do we mitigate disruption to our supply chains from extreme weather events and nature loss; or support employees who may face increased climate-related displacement or health risks (such as heat stress, poor air quality, and the spread of diseases)?
• How can we harness the opportunities of AI while managing the possible security risks and impacts to the workforce?
• How can we use AI to enhance our own board effectiveness?
• How could management of risks facing our business (e.g. natural resource depletion) be improved through cross-economy engagement, and what is the board’s role in that? (WTW’s 2025 Board Stewardship Survey revealed 75% of board members agree it not only their responsibility, but also in the interest of the organisation, to influence systemic change to address global risks.)

These are some of the questions that forward-thinking boards will be asking to ensure they are future proofing their organisations.

Key Actions for Boards:

• Review board agendas to prioritise resilience: Align as a board on your stewardship role and ensure that there is sufficient time on the annual board agenda dedicated to stewardship and long-term strategy. Committee terms of references should also support a stewardship mindset.
• Adopting dynamic risk mindset and management tools: Invest in dynamic Enterprise Risk Management (ERM) processes and scenario planning to equip board discussions on interconnected and unpredictable risks – control the controllables.
• Broaden stewardship impact: Consider how your stewardship role and the company’s future resilience may depend on interdependencies with other players across the economy (e.g., how does our policy engagement align with decarbonization efforts?).

02

Review Boardroom composition, skills and dynamics with long-term stewardship in view

As the business landscape continues to shift rapidly, it’s no longer enough for boards to focus solely on the technical skills of their members. The key to effective governance is ensuring the right composition, combination of perspectives, culture and dynamics that enable boards to challenge, embrace change and innovate. This goes beyond merely meeting diversity quotas, it’s about fostering a collective intelligence in the boardroom that is agile and capable of both navigating today’s challenges and taking a long-term perspective in the face of uncertainty.

As John Bremen and National Association of Corporate Directors (NACD) have explored, ‘effective boards develop new skills to thrive while maintaining the traditional skills necessary for good governance’. This includes skills in emerging risk areas such as human capital, cybersecurity and the green transition. However, WTW’s Board Stewardship Survey (2025) found that only half (51%) of respondents have confidence in the skills of fellow board members to provide effective oversight over climate-related risks and opportunities; and this reduces to less than one-third (28%) when asked about other environmental risks such as nature and biodiversity loss.

Beyond individual expertise, the composition and dynamics of the board itself are equally important – there is little use in individual members possessing certain skills if they can’t be drawn upon constructively in boardroom dialogue. Effective governance requires the ability to collectively challenge, innovate and make decisions - often in the context of incomplete data and many unknowns. This is where critical leadership skills that Bremen highlighted are essential for honing the right boardroom culture: courage, resilience, adaptability, sensemaking and vulnerability.

Similarly, it may be necessary to revisit the board structure to facilitate the necessary time on material business issues (for example, is there a need for a standalone risk and/or sustainability committee?). Indeed, the board’s key role in risk management was reaffirmed by Provision 29 in the 2024 UK Corporate Governance Code.

Key Actions for Boards:

• Ask some simple questions: such as “who is not in the room?” with the aim of identifying gaps in knowledge or perspectives that may be hindering decision-making; and “do we reach consensus too easily?”, which may be a sign that the board may not be challenging the status quo or exploring alternative approaches.
• Ensure your board evaluation approach captures dynamics and goes beyond a self-assessment questionnaire: Review your board evaluation approach and skills matrix to ensure they assess not just that technical skills but also the culture, dynamics and stewardship skills of the board and its ability to innovate, manage change and drive long-term resilience.
• Review board training needs and board structure: Considering the pace of change, regularly reassess the skills and training needs needed on the board to help tackle today’s risks, stay ahead of future risks and harness long-term opportunities.

Align executive incentives and risk appetite

As Board governance focuses on resilience and innovation, the question of how to balance futureproofing with risk-taking becomes paramount. This highlights a key tension: the UK’s tendency towards “safetyism” in corporate governance, which contrasts with the more risk-tolerant stance often seen in the U.S. Caution is understandable in the face of rising risks and complexity, but it also risks stifling the innovation necessary to stay competitive.

Recent trends in the UK corporate governance landscape suggest a slight easing of bureaucratic burdens, empowering boards to take more calculated risks in order to boost the UK’s competitive global standing. For example, the Capital Markets Industry Taskforce has made powerful arguments for change in this area and we have since seen influential guidelines surrounding executive compensation evolving to allow for more flexibility.

Executive compensation is a key governance mechanism for boards and today’s risk landscape requires boards to rethink how they incentivise executives to encourage sustainable value creation and calculated risks that align with long-term strategy. Early insights from the 2025 AGM season in the UK showed a continuation of bold moves in executive remuneration policy changes, largely proposed with the rationale of ‘increasing global competitiveness’. This reflects some divergence from UK pay norms with more focus on a business-first approach and perhaps greater openness to risk taking. However, it is critical for boards to thoughtfully consider the right incentive design for them, not to blindly follow market practice, whilst maintaining a view of evolving governance and investor expectations.

Key Actions for Boards:

• Review incentives alongside risk appetite: Reevaluate executive compensation structures to ensure they align with long-term company goals, resilience, and responsible risk-taking, whilst staying abreast of evolving stakeholder views.
• Prioritise materiality in incentive metric selection: Select the most material performance metrics for your business to drive strategy and long-term resilience and avoid including too metrics many which can dilute focus on core business KPIs.
• Create a risk-aware culture: Encourage executives to take a broader view of risk, considering both short-term and long-term impacts. Foster a mindset that treats risk as an enabler of growth and opportunity.

The modern business landscape demands a new approach to governance. Boards must shift their focus from simply managing stability to driving long-term value creation, innovation, and resilience. By revisiting their stewardship role, rethinking board composition, skills and dynamics, and aligning executive incentives with sustainable growth, boards can navigate the challenges ahead while positioning their organisations for success in an uncertain world.