#AGS26 highlights: Directing the next decade

Innovate or stagnate

Outgoing Australian Securities and Investments Commission (ASIC) chair Joe Longo posed the question to participants, “Is it worth the risk to be a company director in Australia these days?”

Longo said Australia is one of the few places in the world where directors’ duties are enforced publicly, but Australia faces a choice to innovate or stagnate. This requires fresh thinking, smart risk taking and collaboration across the private and public sectors.

“Being a director is not for the faint-hearted,” he said. “It comes with an ever-expanding thicket of risks, liabilities and obligations in an environment growing more complicated by the day with the weight of community expectations on your shoulders.

“What it means is that we need good directors more than ever before. Directors who are curious and capable and pay attention to detail. Directors who are bold enough to take the risks and draw the line at recklessness. Directors who are hungry to learn and humble enough to admit when they don’t know. Directors who embrace new technology and are clear-eyed about risks and opportunities in equal measure.”

Longo encouraged those with these qualities and more to say yes to becoming a director, urging the audience “to be the kind of director who dares to build a better future for all of us”.

A new world order

In a poll during the AGS26, only one per cent of respondents said they believed their board was highly prepared for a geopolitical threat.

“If you as a board haven’t considered the question of how you would sustain core operations in the face of no telecommunications network, your operating systems being turned off, interruption to your fuel, water and even food security, then your board hasn’t moved geopolitics from a peripheral issue to a mainstream issue and it probably needs to shift,” said David Moffatt MAICD, chair at essential infrastructure services provider Ventia.

In a world defined by a more fragmented geopolitical environment, rapid advances in AI, ageing demographics and a more constrained and contested energy system, the speed, volatility and constancy of change is “shifting the balance away from pure economic efficiency and towards economic security”, said Commonwealth Bank chair Paul O’Malley.

“As directors, we are not just stewards of individual companies. We are stewards of parts of Australia's economic architecture. Every major investment decision, every decision about buffers and every decision about capability building contributes to our collective capacity to weather future shocks,” said O’Malley.

“If the tax pool in Australia diminishes because economic rents are being extracted out of Australia to global institutions, then our ability to fund everything that is essential and unique about Australia's great quality of life is at risk.”

Directors need to ask whether regulation is fit for purpose in the decade ahead and whether it supports productive investment, applies consistently to the same economic activity and anticipates continued economic transformation, rather than simply responding to past crises, he said.

“Across multiple sectors, we’re seeing uneven regulatory treatment for functionally similar services. Domestic institutions are required to fund infrastructure, hold capital, invest heavily in resilience and meet extensive regulatory obligations. In Australia, it is questionable whether foreign institutions have the same obligations.”

Uneven treatment has the potential to weaken the domestic institutions Australia relies on in times of stress. If the obligations, infrastructure costs and accountability sit primarily with domestic institutions, but the economics and customer relationships increasingly shift offshore, “we should not be surprised if national capability weakens over time”, said O’Malley.

Australia needs a more mature business-government partnership and “too often, the debate is framed as large business versus small business, as if one has to lose for the other to win”, he added.

“These challenges – from AI and economic crime to geopolitical volatility and regulatory complexity – have a common thread. They cannot be solved by individual companies acting alone or by government acting without business expertise,” said O’Malley.

“Where settings create uneven playing fields or unintentionally shift value and risk offshore, boards should understand the implications and be prepared to contribute thoughtfully.”

NAB chair calls for strong governance

Philip Chronican GAICD, chair at NAB, acknowledged Australia has faced moments of major economic transition before. 

“We’ve succeeded when we’ve been willing to adapt, diversify and invest for the long term. The global environment is much more uncertain and all assumptions that we have held no longer hold. But Australia enters this new era from a position of strength,” said Chronican.

“This calls for strong governance – and governance policies and processes to be refreshed to fit the changing world. If we can broaden our economic base, look beyond our traditional exports, invest in productivity and capability, and preserve the social cohesion that underpins trust, Australia can continue to prosper, not despite global volatility, but because we’re prepared for it.”

Dr Merriden Varrall, special adviser, geopolitics, at KPMG Australia, said boards need to agree on a strategic decision stance to build preparedness. They need to agree on one no-regret de-risking move, agree on an optionality move that provides a sense of where choices might be being squeezed. They also need to agree on the signals to watch. 

“Then it’s over to management to analyse and operate those ideas, but it’s our responsibility at the board level to have those risk appetites and work out our strategic choices before things go wrong,” said Varrall.

Abigail Bradshaw, director-general at the Australian Signals Directorate, said there was still the need for an uplift of board members’ understanding of technology. 

“Just as you understand financial systems and legal systems, even though you might not necessarily have an accounting degree or a law degree, there needs to be a basic level of understanding of tech,” she said.

The expanded role of governance

Mark Rigotti GAICD, AICD CEO and managing director, reflected on how governance expectations have evolved over the past decade, with membership of the AICD growing from 37,000 in 2015 to more than 53,000 today.

“That growth tells a story not just about scale, but about the expanding role governance now plays in organisational performance, resilience and trust. That same evolution is evident in governance education.”

The AICD’s “Membership Reimagined” initiative is developing personalised learning roadmaps, mentoring pilots and peer discussion groups to better support directors throughout their governance careers. 

Continuous learning remains a key priority for directors, said Rigotti. The AICD now records about 40,000 webinar registrations and more than 130,000 downloads of governance resources each year.

“These initiatives are about value, relevance and accessibility,” he said. “They reflect our belief that governance capability is not static and that directors benefit most when learning is continuous and connected.”