Less than a month after a near 10 percent gain in confidence, driven largely by the prospect of business-friendly policies and deregulation, the 125 public company board members polled December 5-12 now rate their outlook for business conditions by this time next year 6.9 out of 10, down from 7.0 in mid-November.

It’s not a significant decline from November’s multi-year peak—and it remains 6 percent above where it started the year (6.5/10)—but it is interesting to note that most of the commentary accompanying the rating this month have turned cautionary, at best.

“Trump presidency will [lead to] significantly higher levels of uncertainty and anxiety, which will cause a consumer spending pullback,” said Manny Chirico, the chair of BCI Brands and the former chair and CEO of PVH Corp. “Anticipate U.S. heading into recession in late 2025/early 2026.”

“Why do we think deporting employees and customers, adding tariffs and encouraging daily uncertainty is good for business? I don't understand why successful businesspeople are participating in this,” said Bill Korn, who serves on the boards of CareCloud and Jerash Holdings. He expects business conditions to fall to a 2 out of 10 by the end of 2025—from 8/10 today.

Overall, only 39 percent of directors polled now expect business conditions to improve in the U.S. in 2025, down from 54 percent in November. And those who adjusted their outlook in recent weeks have mostly shifted toward the negative, with 39 percent anticipating conditions to deteriorate (vs. 27 percent in November)—an increase of 12 percentage points. The proportion of those who expect conditions to flatten through 2025 also rose, though to a lesser extent, from 19 percent in November to 23 percent in December.

, with a decrease of 9 percent in the proportion of CEOs who now expect business conditions to improve in 2025, vs. November. The difference, however, is that despite that shift, the CEOs polled showed much more optimism about the 2025 business environment than board members, expecting business conditions in the U.S. to hit 7.0 out of 10 by this time next year, up from their November level of 6.8—and up 10 percent from their Q3 trough.

There are differences by industry, of course. Our survey finds the highest levels of optimism among board members in the materials sector, as well as within the consumer staples and energy sectors. Directors in those sectors forecast business conditions in the U.S. to hit 7.8 and 7.3, respectively, in 2025—an increase of 26, 15 and 11 percent from what they rate them today.

At the other end of the scale, we find directors in the consumer discretionary and financial sectors both showing a deterioration of business conditions in the year ahead: -3 and -1 percent, respectively. Overall, 57 percent of directors in the financial sector expect headline inflation to climb back above 3 percent in 2025—the highest proportion who feel this way across all sectors. “By 2026, inflation will be greater than 5 percent,” Adam D Crescenzi of the Clough Global Opportunities Fund, told us.

Our December poll found public company board members aren’t anticipating a boom year in 2025, with 42 percent forecasting the S&P 500 to be between 6,250 and 6,500 by December 2025, up from its level of approximately 6,000 today. “My personal estimate is 6-9 percent S&P growth in 2025,” said Ari Papoulias, who serves on the board of Nasdaq-traded United-Guardian.

Most directors agree that the incoming administration’s proposed tariffs, if implemented, will reignite inflation in the United States. For that reason, three-quarters (77 percent) expect headline CPI to tick up—or at least hover—in 2025, with 36 percent of those saying it will climb back up over 3 percent by the end of the year.

“I haven't seen anything that tells me inflation has stabilized,” said one director polled. “If tariffs go through, the consumer will be paying that in increased pricing.”

Based on that, it is no surprise to see that the majority don’t expect to see many more rate cuts coming from the Fed in 2025. “There will be incredible pressure on the Fed NOT to raise rates,” said one of the board members who participated in the poll. “It will be an ongoing battle held over social media by the new administration.”

Still, despite the focus on the economy and the potential “supply chain warfare” that some say may arise from the incoming administration’s stance on international trade, only 10 percent view that as a catastrophic event. Instead, most believe there is greater risk that an international geopolitical conflict will alter the course of history, with 52 percent citing it as their most likely black swan ahead.

"This aligns to what we’ve been hearing from directors in our research; geopolitical risk is firmly on the radar for companies in 2025,” says Dottie Schindlinger, executive director of the Diligent Institute. “This issue has steadily crept up on the board agenda, compelling directors to reassess their strategies and priorities. Company leaders must remain vigilant, continuously evaluate the global landscape and develop robust frameworks to navigate these risks effectively.”

In second place as most likely as the next history-altering event? Widely deployable quantum computing capabilities.

When asked more broadly what they believe will be the next big governance trend to watch in 2025, three themes emerged: a pullback on DEI/ESG initiatives (21 percent), an easing of regulations across governmental agencies (20 percent) and AI oversight, including its ethical consequences (19 percent).

Director Confidence Index: December 2024

Our NIS2 webinar provides essential insights into the 

EU's Network and Information Systems (NIS2) Directive

, emphasizing the need for organizations to adopt a risk-based approach to cybersecurity. Experts speakers Nick Frost and Nils Müller discussed key strategies for compliance and highlighted the importance of collaboration between cybersecurity and legal teams.

The EU's NIS2 Directive presents significant challenges for organizations striving to enhance their cyber resilience. We recently held a NIS2 webinar with guests Nick Frost, the Co-founder and CPO of Cyber Risk Management Group and Nils Müller, Partner at Eversheds Sutherland, which provided valuable insights into the directive's implications and the essential steps required to comply effectively.

In the above clip from our NIS2 webinar, Nick Frost, the Co-founder and CPO of Cyber Risk Management Group, outlined four considerations for adopting a risk-based approach to cybersecurity. These steps are crucial in today’s landscape, where cyber threats are increasingly sophisticated and organizations are heavily reliant on digital systems.

Here are the considerations Frost considers key to successful NIS2 compliance:

 Conducting comprehensive risk assessments is fundamental for understanding the cyber risks an organization faces. Establishing a consistent methodology to assess, analyze and evaluate these risks enables organizations to prioritize their cybersecurity efforts effectively. This process involves identifying critical business areas and determining the necessary level of controls to safeguard these assets.

 Integrating cyber risk management into the overall governance framework of an organization is vital. Cyber risk should be a key component of risk committees or enterprise risk management structures. By doing so, organizations can better align cybersecurity efforts with business objectives, ensuring that decisions made at the top are informed by a clear understanding of cyber risks. This integration also facilitates a unified approach to managing risks across the enterprise.

 Given the dynamic nature of cyber threats, ongoing risk monitoring is essential. This involves staying abreast of changes in the external environment, such as geopolitical shifts, and their potential impact on the organization's risk profile. Internally, organizations must monitor changes in their business operations, such as new vendor relationships or technological adoptions, which could introduce new vulnerabilities.

Effective risk reporting is perhaps one of the most challenging yet crucial aspects of a risk-based approach. It requires translating technical cybersecurity issues into a language that stakeholders and decision-makers can understand and act upon. Collaboration between cybersecurity and legal teams is invaluable here, as legal experts can help articulate the implications of cyber risks in a business context, thus enhancing the clarity and impact of risk reports.

The implementation of these considerations not only strengthens an organization’s cybersecurity posture but also ensures compliance with 

. Importantly, the directive calls for a proactive stance on cybersecurity, demanding that organizations assume breaches will occur and prepare accordingly. This preparation includes establishing clear protocols for incident response and ensuring timely notifications to relevant authorities in the event of a significant incident.

 to view our full NIS2 webinar on-demand.

Additional insights from our NIS2 webinar

Furthermore, the webinar highlighted the importance of collaboration between cybersecurity and legal teams. This partnership is essential for effective risk management and compliance, as it combines technical expertise with legal acumen to address the multifaceted challenges posed by cyber threats and regulatory obligations.

Adopting a risk-based approach to cybersecurity is not merely a compliance requirement under NIS2; it is a strategic imperative. By focusing on risk assessment, governance, monitoring and reporting, organizations can navigate the complexities of NIS2 and build a robust defense against the ever-evolving landscape of cyber threats. Business leaders must embrace this proactive approach and foster collaboration across their teams to ensure their organization’s resilience and compliance in the digital age.

to ensure visibility over cybersecurity performance, with effective controls and monitoring to deliver the assurance needed by senior leaders.

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