EY’s Center for Board Matters gathered a panel of experts to share their perspectives in a November 16 webcast. The panelists—Stephen Klemash, the Center’s Leader in the Americas, Dr. Adam Posen, president of the Peterson Institute for International Economics, and three EY specialists—covered a wide range of topics of particular interest to both directors and shareholders. Based on their discussion, here are some of the tough questions boards should be thinking about as they seek to best position their companies for success in this new environment.
1. How are we informing ourselves about the new administration’s proposed policies and their implementation? More than ever, boards must have a finger on the pulse of what Washington is thinking.
2. Do we have an engagement plan for advancing our positions on important issues? It’s critical that boards have clearly defined objectives to be communicated by advocates with access to the new decision-makers.
3. How can we distinguish between issues and actions that are temporary and those that are permanent? Consult with your legal, financial and political advisors to know what’s tactical and what’s strategic, and deal with things accordingly.
4. Are we prepared for potential shifts in tax policy? That the tax code will change is a matter of how, not if. In the meantime, be sure to maximize existing benefits before year-end.
5. Are we positioned to benefit from infrastructure spending? If yes, prepare to make money but be wary of potential “Made in America” requirements — they could be problematic if your products or services originate in other countries.
6. Are we prepared for inflation to rise? If the administration’s pro-growth policies are enacted, higher inflation will likely result. Boards must have contingency plans ready.
7. What’s our exposure to the U.S. dollar? This is a multifaceted issue. The dollar would likely rise if inflation does, and the administration’s proposed reductions in foreign trade could affect the profitability of imports and/or exports.
8. What are our options if our supply chain is threatened? An expected recalibration of relations with other countries, particularly regarding trade and defense, could force companies to reconfigure the international portions of their supply chains.
9. Are our risk assessment processes sufficiently robust to adapt to the new environment and identify unintended consequences? Given the new administration’s need to reconcile many of its campaign stances with realities on the ground, the number and type of unintended consequences could increase dramatically. Sound risk assessment is crucial for companies to stay on top of potential outcomes.
10. How can we reassure our diverse work force that 1) diversity and inclusion remain core values, and 2) we’ll strengthen our efforts to attract a diverse staff? This is a top-of-mind issue for diverse and non-diverse employees alike and should be addressed proactively and frequently.