This article originally appeared in our January 15th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe

After three quarters of near-record low confidence levels

, America’s boardrooms ended 2025 on a surprisingly hopeful note, even as directors brace for another demanding year. The latest 

, our quarterly survey of U.S. public company directors conducted with Corporate Board Member, shows sentiment rebounding sharply after three consecutive quarters at a five-year low throughout much of last year.

Why U.S. board confidence rebounded at the end of 2025

Confidence rose 23% in the final month of the year, climbing from 4.9 to 6.0 on a 10-point scale and finally nudging back into what respondents consider “good” territory. As a key driver behind the shift, directors point to:

In other words, after a year of policy whiplash, boards feel they at least understand the playing field a bit better - even if they don’t like it.

That late-year rally, however, shouldn’t be mistaken for a victory lap. For 2025 overall, average confidence registered just 5.0, well below 2024’s 6.2 and far short of the 6.9 directors had forecast a year ago.

Three quarters of respondents say tariffs were a primary reason conditions fell short of expectations, far outpacing any other factor. Their comments underscore how hard it is for boards to plan when rules change midgame; familiar playbooks don’t work when trade policy and enforcement shift repeatedly.

Tariffs, uncertainty and a new risk landscape

Directors in sectors long considered resilient

, like life sciences, describe this period as unlike anything they’ve seen in decades. Many point to deferred capital spending and elongated decision cycles as companies try to model scenarios that are, frankly, impossible to model with precision. That reality is reshaping how boards think about risk, resilience and the very nature of their oversight role.

Their outlook for business conditions by late 2026 is 6.0, essentially flat from today’s reading. CEOs, by contrast, are modestly more upbeat: in a parallel survey by Chief Executive, they project a 6% improvement to 6.4, and 44% say they expect conditions to improve, compared with 32% of directors. That gap is telling. CEOs are closest to near-term operations; boards are increasingly focused on longer-horizons, compounding risks.

Those directors who are optimistic tend to anchor their confidence in 

 seeing opportunities to transform productivity and reimagine business models. Among those who expect deterioration, concerns skew heavily toward macro and geopolitical risk, with uncertainty emerging as a dominant theme -— on par with inflation for many neutral respondents.

How boards can strengthen oversight and learning in 2026

directors emphasize adaptability, deeper engagement and faster learning, recognizing that they must connect dots across 

5 years of the Director Confidence Index: Tracking a more demanding role

This quarter also marks five years of fielding the Director Confidence Index, and we asked respondents how their roles have evolved since 2020.

Board members say they are spending far more time on risk in a “more complex and faster moving” environment, with cybersecurity, AI, geopolitical shocks, supply-chain integrity and policy volatility now standard agenda items. Many describe a shift from “managing the present” toward future-oriented scenario planning and strategic resilience, alongside heightened scrutiny from investors and activists that expands the mandate beyond financial performance to culture, human capital and corporate character.

Taken together, the picture is clear: being a director today is more time-intensive, strategically demanding and consequential than it was in 2020 and perhaps than it has ever been. One director distilled the 2026 playbook to three words: “Defend and survive.” I would add a fourth: learn. Boards that invest in learning about AI technology, geopolitics, regulation and stakeholder expectations will be best positioned not just to endure whatever comes next, but to help their organizations emerge stronger on the other side.

Boards brace for 2026: Confidence rebounds, risk looms 

Boards are now required to declare whether their 

 were effective at the balance sheet date, as the updated 

 brings Provision 29 into effect for financial years beginning on or after 

 The Code continues to operate on a comply or explain basis, but expectations have strengthened around clarity, evidence and accountability. 

This makes materiality more important than many first assumed. Deciding which controls are material is not simply a technical requirement. It is a visible statement about how the organisation understands risk, performance and long‑term resilience. It also provides a rare opportunity for boards to shape how their priorities are interpreted by investors and other stakeholders. 

In other words, your material controls list is not just a requirement. It is a signal.


Material controls reflect the organisation’s priorities

 places responsibility on the board to determine what is material, guided by strategic risks, stakeholder impact and sustainability. 

A clear, well‑defined set of material controls shows that the board knows what drives the business and which risks matter most. It contributes to a narrative of discipline and alignment between strategy, governance and execution. When the list is coherent and focused, stakeholders can clearly see how leadership is directing attention. 

The Code requires boards to cover financial, operational, reporting and compliance controls, but it does not require every control to be elevated to material status. A concise list communicates that the organisation understands its priorities and has made thoughtful decisions. It shows that the board has concentrated on the controls that genuinely influence outcomes rather than creating unnecessary noise.

The goal is not to capture everything. It is to highlight the controls that truly shape the organisation’s performance and risk exposure. A selective list shows confidence and maturity. A very broad list can unintentionally suggest a lack of clarity about what matters most.

Material controls should align with the future, not just the past

Many organisations have control frameworks shaped by historic reporting needs, but 

 broadens expectations across all types of controls.

Boards can use this as an opportunity to bring materiality in line with where the business is going:

Processes that underpin customer experience or revenue

Areas where regulatory expectations are increasing

Operational dependencies that influence resilience

A material list aligned to today’s environment demonstrates that governance thinking is keeping pace with the organisation’s ambitions and operating reality.

The boardroom conversation shapes the quality of the list

High‑quality materiality decisions are rarely produced by templates. They come from board discussions that explore judgement, perspective and risk tolerance.

The most effective boards look at materiality through a strategic lens. They ask whether the draft list reflects the organisation’s direction, whether the controls chosen offer real insight and whether the set is coherent when read alongside strategy and principal risks.

These discussions help ensure that the final list is balanced, defensible and aligned.

Provision 29 requires boards to describe how they monitored and reviewed the framework, declare whether material controls were effective and disclose actions taken when controls were not.

This gives investors a clearer view of how governance, strategy and organisational performance fit together.

The quality of action taken where issues are identified

When these elements line up, the organisation presents a cohesive and credible picture. When they do not, confidence can slip.

Material controls now form part of the organisation’s governance identity

The introduction of Provision 29 has elevated materiality from a background process to a visible governance decision. The controls you highlight say something about how you lead, how you think about long‑term success — including the ROI of stronger internal controls explored in 

 — and how well your governance approach reflects the organisation’s reality.

A well‑considered material list helps tell a clear story: It shows that governance is connected to strategy, risk and sustainable performance. Used well, materiality becomes more than a requirement. It becomes a strength.

Strengthen your approach to the UK Corporate Governance Code with tools that bring structure and visibility to every step. Discover 

Diligent for internal controls and risk management

Diligent for board and leadership collaboration

 the solution that unifies governance and assurance.

Material controls as strategic signals: What your list really says about your organisation

This article originally appeared in our December 18th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe 

As we close out 2025, I’ve been reflecting on what this year taught us and the word that comes to mind is “unprecedented.” Insights from the Diligent Institute’s research show how directors navigated multiple unprecedented challenges – often simultaneously – while also driving major change. The lessons we learned this year aren’t just a look back. They can be a compass pointing to the directional shifts boards will need to embrace as governance moves into a faster, more AI-enabled era.

Five governance shifts boards must prepare for in 2026

What will change: Boards will move beyond passive reporting and lean into more 

 Predictive analytics and scenario planning will become part of everyday conversations, helping directors navigate volatility before it hits.


Why? Director confidence hit historic lows in 2025. Our 

 conducted in partnership with Corporate Board Member, landed at just 4.8 out of 10, among the lowest since the pandemic. That’s a wake-up call for faster, smarter decision-making. If you’re curious whether sentiment is shifting, our Q4 results will be live by the time this issue hits your inbox. Check them out to see if optimism is making a comeback.

What will change: Dashboards won’t just summarize risks. They’ll surface them within hours, and crisis protocols will kick in during the first 72. AI-powered assurance will scan massive datasets to catch anomalies as they happen, and directors will be able to ask complex questions in plain language and get instant answers. Oversight will move from reacting after the fact to staying ahead of the curve, a fundamental change in risk management.

 7.9 out of 10. Quarterly updates aren’t enough anymore. Boards need early-warning systems and integrated intelligence to keep pace.

3) AI governance moves to the top of the agenda

What will change: Agentic AI is moving fast, from assisting to acting. Boards will need to build AI literacy, test for bias and keep humans in the loop to manage less visible risks.

Why: Two-thirds of directors used AI tools in 2025, but 

, 57% of respondents said their organizations had deployed AI in one or more areas of the business, but only 36% had audited usage.As AI deployment climbs higher on the priority list for 2026, closing this governance gap is critical.

4) Integration becomes a growth essential

What will change: M&A ambitions will stall without tech integration. Boards that prioritize scalable platforms will unlock faster, cleaner transactions and reduce risk during rapid growth periods as integration readiness becomes a board-level KPI.

 conducted in partnership with Wilson Sonsini and NetSuite, found only 4% of organizations had fully integrated GRC and financial systems.

What will change: Board agendas will shift toward forward-looking conversations powered by predictive analytics and cultural insights. Directors will widen their lens beyond financials to include culture and workforce resilience, using anonymized data to spot risks before they surface.

Why: The ability to anticipate, not just react, will define effective governance in 2026. Boards that lean on AI-driven scenario modeling and continuous feedback loops will stay aligned with fast-changing realities.

Turning 2025 board lessons into a 2026 action plan

2026 will reward boards that act, not just react. That means pairing human judgment with AI-driven foresight, embedding continuous assurance and integrating systems for scalability. Governance is moving from static to dynamic – and the boards that thrive will be ready to keep pace.

Check out the full blog on trends shaping governance in 2026.

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Boards brace for 2026: Confidence rebounds, risk looms

Material controls as strategic signals: What your list really says about your organisation

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