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Boards in Emerging Markets: Navigating a Complex Landscape

In a recent global study conducted by Boston Consulting Group (BCG), Heidrick & Struggles, and INSEAD, it was revealed that boards in emerging markets are entering a new era characterized by heightened uncertainty. The report titled "Governing Under High Uncertainty: Opportunities for Emerging-Market Boards" underscores the unique challenges faced by these governance bodies in light of geopolitical volatility, technological disruptions, and evolving societal expectations.

Understanding the Shift in Governance Landscape

The findings stem from a series of discussions and in-depth interviews with over 100 experienced board members across various emerging markets. It highlights a significant shift in how uncertainty is perceived today. Rather than being seen as isolated or predictable risks, uncertainties now present themselves as broader, more dynamic forces defined by what the report refers to as "unknown unknowns"—factors that defy traditional forecasting methods and risk management strategies.

The cumulative effect of global and local pressures has been profound. International shocks such as geopolitical tensions and trade disruptions do not merely replace domestic challenges but amplify them, thereby placing additional stresses on governance systems that are often still in development.

Unveiling Opportunities Amidst Challenges

Despite the daunting landscape, the report presents a silver lining. Many boards are beginning to reinforce fundamental governance disciplines such as clarifying roles, enhancing risk oversight, and advancing contingency planning efforts. At the same time, there is an increasing focus on nurturing trust, fostering a strong company culture, and enriching collective behavior among board members. By leveraging these elements—both hard (structural) and soft (cultural)—boards can remain composed, unified, and proactive, even in the face of significant uncertainty.

Beyond Corporate Governance: A Greater Role

The study also emphasizes the expanded responsibilities that boards in emerging markets can adopt beyond their companies. By engaging constructively with regulatory authorities, policymakers, and industry peers, these boards can contribute to strengthening governance standards within their markets. Such endeavors not only bolster institutional resilience but also enhance stakeholder trust, transforming governance into a foundational aspect of economic and social stability.

Burak Tansan, a senior partner at BCG, remarks that in today's age of "sustained uncertainty," effective governance is contingent not just on formal procedures but also on the composition of the board and the quality of discussions held within it. Boards that combine diversity, independence, and a balanced mix of strategic and sectoral expertise, bolstered by timely and high-quality information, are increasingly better positioned to anticipate potential risks and capitalize on opportunities early.

Structuring for Success in Uncertain Times

To assist boards in this complex landscape, the report provides a practical framework designed to assess their readiness for high uncertainty. This framework encourages boards to evaluate their governance across three dimensions: the rigid structures and processes, the softer trust and behavioral dynamics, and the ecosystem responsibilities extending beyond the company itself. Together, these components offer a roadmap for boards aspiring to govern effectively amid growing complexities and uncertainties.

Annet Aris, a professor at INSEAD, further notes that effective governance in such uncertain times requires boards to advance beyond mere reactive oversight, advocating for a greater emphasis on learning, dialogue, and inclusivity. By embedding decisions within a framework of purpose and values while remaining open to diverse perspectives, boards can cultivate the resilience necessary to thrive in unpredictable environments.

In conclusion, this study highlights the imperative for boards in emerging markets to adapt to an evolving governance landscape marked by uncertainty. By collectively strengthening governance practices and embracing their broader societal roles, they can effectively navigate the complexities ahead, resulting in enhanced corporate resilience and long-term value.