Spotting risk

Experts concur that today’s directors need to be able to see around corners — to predict, recognize and analyze risk. Financial risk, compliance risk, trade risk, regulatory risk, cybersecurity risk, AI risk, reputational risk, supply chain risk, workforce risk, energy risk and security risk are some of the complexities that boards and CEOs need to navigate today.

In January 2025, when other companies were dialing back their DEI priorities, Costco held firm when the company’s board of directors voted down a shareholder proposal to evaluate its DEI policies, saying the practices are “legally appropriate” and emphasizing that a diverse workforce serves the needs of Costco members, who come “from all walks of life and backgrounds.” An important part of the reputational and risk management strategy was not engaging in the cultural debate but rather emphasizing stakeholder value and the business case.

Now, tariffs and trade threats and opportunities have risen in importance.

“The whole geopolitical risk world is, first and foremost, very much at the top of mind of board directors, as it should be,” says Julian Ha, global head of search firm Heidrick & Struggles’ government and corporate affairs practice.

Stephen M. Davis of Harvard Law School, in a recent post on the school’s Forum on Corporate Governance, agrees. “Directors operating in markets accustomed to high public policy risk have long practice in surfing political volatility,” he writes. “But it is relatively new in the U.S., where customs of political influence were generally practiced according to established and predictable convention. Now market players need analytics tailored to the times.”

A report by board technology and advisory firm Board Intelligence notes that directors ranked their board’s impact in terms of “offering big-picture perspective and horizon scanning” at the lowest level, a red flag that needs to be addressed.

Ha notes that boards are navigating political risk by bringing in experts to report to the board, or appointing advisory boards, even if they aren’t yet directly tapping public affairs professionals to join the board.

While the turbulent external environment is pushing boards to evolve, it’s also shifting the standing and daily tasks of the public affairs professional.

Reporting to the CEO

Until recently, public affairs leaders who had trouble getting C-suite attention often had to clarify their role and submit elaborate ROI reports to make the case that they weren’t just a cost center. They often reported to Legal, burying some of the potential for nuanced influence under a risk-averse approach.

Now, they’re being given airtime. Public affairs is reporting to the CEO.

“In a lot of my recent searches, that function is going into the CEO because the CEO appreciates that the public affairs team is not only defensive, but also offensive, building the business,” says Ha. “With this person sitting to the right of the chief executive, decisions can be made based on the signals they’re providing and the data they’re supplying — helping leadership determine where to invest and where to go next in terms of R&D and CapEx. So it’s much more strategic.”

With CEOs more focused on the importance of fly-ins and government affairs or international expert briefings, public affairs professionals are getting closer to the boardroom. “If they’re not at the table, they’re just one step behind,” says Ha. “They’re whispering in the ear of their CEO.”

Balancing stakeholder pressures

One skill at the center of board stewardship is balancing stakeholder pressures, and public affairs or corporate affairs leaders are often directly in charge of stakeholder relations. Balancing customer, investor and employee needs with the priorities of regulators, as well as local and international communities and grassroots activists, is a skill set that public affairs experts have cultivated.

Many examples of weak handling of social issues, with corporate reputational fallout, can be directly linked to poor stakeholder listening, even if — in a politically charged environment — consistent, purposeful companies sometimes can’t win. The public affairs function needs to be masterful at balancing external pressures and knowing when to communicate and how to respond. This also means versatility in building partnerships and coalitions, positioning the company as an integral part of the fabric of society rather than placing it as an adversary against a particular regulator or NGO. Partnerships can sometimes lead to surprising win-wins.

“Win-wins are more important than ever, but also more difficult than ever,” notes Bank Jorgensen, who is global managing director, board development, at Board Intelligence. “As a board, and as a leadership team, you need to say, ‘Where is it that I stand tall and say no, and where is it that I let go of the importance of something?’ Because otherwise you’re just swaying from one side to another, and that’s not going to be a win for anyone, more like a lose-lose.” Indeed, compromising in the short term may not be good strategy in the longer term, once political winds have changed. “Boards need to ask, ‘What are the right short-term decisions to get to the long term that we want?’ The fear is that we are sleepwalking into a place we really don’t want to go,” Bank Jorgensen adds.

Evaluating expertise

How, then, should boards approach the skills conversation to ensure that they are future-fit?

It’s good board governance to do an assessment every year, or every other year, according to Ha. “The board should hold themselves up to a mirror, or ask a facilitator to interview and assess every board member, to look at the different skills they are bringing,” he says. “And then a good board would task the nominating committee with filling gaps. You’ve got to keep refreshing because every year things change. Two years ago, for instance, I don’t think anyone had AI on their scorecard.”

Perhaps 2026 is the year public affairs appears on that board competencies scorecard.

Maureen Kline is VP, public affairs and sustainability, for Pirelli Tire North America and a vice chair on the Public Affairs Council’s Executive Committee. She serves on several boards and advisory councils.