The growth of emerging markets is attracting many developed-market companies looking for growth opportunities. Yet the risks companies encounter in these markets can pose major threats to success. Board directors are challenged to help their companies appropriately plan for and address the new strategic, operational, compliance-related, and political risks that international growth entails.
Directors recognize that full board and board committee oversight has to adapt in order for companies to successfully navigate growth in international markets. They are seeking education on related risks and regulatory matters including FCPA and UKBA enforcement, ensuring strategic plans and risks are examined concurrently at the board level, and adding directors with international experience to the board.
International risks and opportunities
Audit committee members identified a wide range of strategic, operational, financial, and compliance risks and opportunities in doing business overseas. They highlighted key factors for success in global business strategy and noted practices that have enhanced board and audit committee oversight of international issues.
Board and audit committee oversight of international opportunities and risks
Members discussed the strategic, operational, and compliance risks associated with emerging markets growth, and outlined ways that management, the board, and the audit committee help their companies capitalize on the growth opportunities and mitigate the risks in emerging markets.
Engaging with strategy after the financial crisis
Lead Director Network (LDN) members discussed how they engage with strategy in a post-crisis, globalized business environment. The focus of their renewed strategic review is often international, where the excitement concerning impressive growth opportunities is tempered by distinctive risks. Ambassador Susan Schwab, the 15th United States Trade Representative, joined the meeting as a guest.
Board and audit committee oversight of M&A
A transactions advisor noted that “It is the best of times, and also the worst of times for M&A.” Members shared practices to enhance transaction oversight before, during, and after a deal is announced.
Risk in emerging markets
The expert who coined the term "emerging markets," Antoine van Agtmael of Emerging Markets Management, discussed with audit chairs the dramatic shift towards growth in the emerging markets and implications for oversight.