In an environment shaped by uncertainty, growing recession fears and trade upheavals, the majority of directors and general counsel are holding firm to their growth agenda for now despite ongoing volatility.

A survey of 165 general counsel and corporate directors at U.S. public companies conducted in March by 

 and Diligent Institute finds two-thirds still prioritizing growth initiatives this year—and 9 percent of them say they are doubling down on growth thanks to new opportunities in the market.

However, 32 percent say their company has pivoted to a wait-and-see approach. The wait is likely to last until there is more clarity on the economic front and what all the actions taken today will mean for business, but most of those polled say they expect the current volatility to have faded by the end of the year—and for many, this means companies must maintain their financial strength to seize emerging opportunities.

“There is a lot of uncertainty at this time, but I believe it will pass in the next 9 months,” said one of the directors whose company is staying the course on capturing growth this year.

“The current trade uncertainty will temporarily slow the U.S. economy in 2025, while 2026 will likely deliver more growth and profits,” echoed another.

But all that could change. The great majority of those polled say a sharp economic downturn would carry a “significant” to “detrimental” blow to their business.

“I have invested and sat on board through the internet bubble, the great recession and Covid. This is the most concerned I've ever been about our government's potentially negative impact on our economy in my entire career,” said one of the respondents.

To mitigate the risk, those who have been through severe financial and economic crises in the past say it is crucial to maintain focus on what management can control while making decisions for the longer term, “not next week,” said the former CEO of an American multinational foodservice company who now serves on the boards of global public companies.

And as important, don’t overcorrect, echoed other seasoned respondents. “Play the long game and stick to your core advantages. Don’t get frenzied day to day,” said one respondent who has led public companies through the past 20+ years.

But the economy isn’t the only risk keeping GCs and board members up at night. There are other events, according to the survey data, that can trump a severe recession when it comes to the repercussions on the company.

For general counsel, who view the current risk environment as “moderately high,” rating it 6.8 on a 10-point scale where 1 is a “negligible risk level” and 10 is a “significant risk level,” the most impactful event to their company would be a major cyber breach, ahead of a sharp economic downturn.

For board members, a cyber attack also outweighs a large economic event, but the number one risk according to those polled is the sudden departure of the CEO or other mission-critical individual.

The survey data demonstrates alignment on top risks between GCs and boards, despite the few points differentials between the main items on the list. Still, the data also reveals a potential opportunity for better board-GC communication on those risks.

For instance, only a third of board members surveyed said their GC provides them with extensive or in-depth support on matters of cybersecurity. And more than a quarter (28 percent) said the support from their GC was minimal to non-existent.

The survey found another area where directors may welcome greater input from their GC: Sixty percent of directors said their GC provides minimal to no support to the board in its oversight of AI.

And one third of directors said their GC is not involved or only minimally involved in the board’s enterprise management risk (ERM) discussions.

The area of enterprise risk management is particularly interesting in this optic because in a Director Confidence Index poll last summer, directors said they 

 when it comes to their board’s oversight of ERM. Forty-five percent of directors indicated they would like better benchmarking data, 42 percent wanted to talk about ERM more frequently, and 23 percent wanted to improve communication with management around ERM.

“Directors continue to view ERM oversight as a pain point, and they’re seeking better data and insights to combat this,” said Dottie Schindlinger, executive director of the Diligent Institute. “The role of the GC can be pivotal in refining the board's oversight of ERM, by providing that comprehensive benchmarking data and using AI tools to create a risk heat map, facilitating more discussions at the board level and enhancing communication with the rest of the management team.”

The survey found several areas where directors say their GC is participating actively in boardroom discussion. On regulatory compliance, for instance: 76 percent of board members say their GC provides extensive support. And 54 percent said the same of the company’s crisis response plan.

Zebra Technologies Board Chair Michael Smith says he’s surprised by these findings because in his experience, the GC “sits through virtually all board meeting deliberations except executive sessions,” he said in an interview with 

“If there's any place where risk assessment and mitigation plans come together, it's usually under the GC, and certainly it's a core responsibility of the entire board of directors, so I would say it is surprising—and concerning,” he said.

Jan Babiak, who serves as audit committee chair at Walgreens Boots Alliance and Bank of Montreal and has served on several other public company boards globally, says the data may highlight an important operational distinction most likely based on company size.

At companies where she has been a corporate director, the GC may or may not attend the full board meeting—unless the GC is also the corporate secretary. The GC, appropriately, isn’t usually the “main interface” during cyber and many other risk-related deliberations with the full board. “A lot of board members don’t realize the levels of involvement of the GC because the GC isn’t necessarily talking with the full board about [some of these issues],” she said. Instead, a member of the senior management team—for instance, the CISO in the case of cybersecurity—is more likely to be sitting in on these conversations with the board or relevant committee, depending on the issue being discussed.

But, she says, that doesn’t mean the GC isn’t providing extensive support or leadership behind the scenes. “I would be very surprised if a competent GC hadn’t been consulted and wasn’t on top of this. In fact, it would worry me if the GC was the one who was fronting [the issue] because that might mean we didn’t have the depth of experience in the organization that we need.”

So, perhaps the disconnect highlighted by the survey findings between directors and general counsel on risk and board support reveals untapped potential for stronger collaboration. As the majority of GCs we polled say they would welcome receiving more education/training on how best to advise the board, this area may provide the first steps to strengthening that all-too-important relationship, as companies continue to face unprecedented disruption to their strategic plan.

What keeps GCs up at night?

Activism newswire. To register for a demonstration and trial of the product,

An interview with Changhwan Lee, founder and CEO of South Korean activist firm Align Partners Capital Management.

Korea has proved to be a challenging market for activists in the past. How has the landscape changed in recent years?



I think overall the environment has been improving, though at a modest level. For example, the government announced the “Value-Up” program last year. Also, the opposition party is driving what they call the “Boost-Up Project.” So, there have been more activist situations and people's awareness of shareholder rights has improved as well. But why I say modestly, is because there haven't been any meaningful legal or regulatory upgrades yet. There are some minor updates, but we have yet to see a very meaningful improvement in the regulatory framework.



Do the “Value-Up” and “Boost-Up” plans share any common ground or goals?



They are related, but their approaches are different. The “Value Up” from the government and the ruling party is to softly encourage companies to improve their corporate governance and shareholder policies maybe emulating the Japanese approach of naming names but in a softer way. But the “Boost Up” plan is more stick than carrot. It requires greater duty of loyalty of directors, cumulative voting and focus on smaller minority shareholders.



Korea’s political situation made headlines with the brief martial law declaration in December. Can the Korean financial markets remain separate from politics?



Overall, yes. The recent political turmoil did create some uncertainties and maybe slowed momentum a bit. But I want to emphasize that both the value initiatives [cited above] are a response to the people of Korea wanting better protection for minority shareholders and a better kept market. That's why both parties are competing with these initiatives. Overall, the goal is the same, to improve Korean corporate governance and the capital market.



In December last year, one of Align's portfolio companies, Doosan Enerbility, withdrew its plan to spin-off Doosan Bobcat, a deal you had opposed. At the time, Doosan cited the market disruption caused by the political disturbances. Was that the real reason, or did politics offer a good excuse to walk away from an unpopular deal?



Both, I think. They were probably really surprised to see the level of backlash from shareholders. Traditionally, these kinds of mergers and splits go through, and no one speaks up. Even the government stepped in this time. And obviously, with the market drop caused by the martial law declaration the deal appraisal value was too high. Even if it went through, this could have become a problem for the group in the future. So overall I think I would say they're both reasons.



The extensive family ownership of so-called Chaebol companies in Korea appears to remain strong. Is the Chaebol system still a hindrance to activism or something that an active shareholder can utilize to seek change at a company?



The Chaebol system has always been the key issue for activist shareholders raising their voices and pushing through proposals. In most cases, these family owners push back hard on any attempt by shareholders to speak up. But, in the long run the level of family ownership is being diluted. The inheritance tax is one of the issues. These families also have multiple children, so as they go through generations the ownerships are diluted.

Shareholders are also getting more tools. For example, the 3% rule (that caps the voting rights of each shareholder at 3% during the election of auditors). So, while the environment is a bit harder for activists than in Japan or the U.S. given this the existence of the Chaebol families, the situation is getting better and it's not impossible to win campaigns, as you can see from our campaigns in 2023 and 2024.



Is there scope for private equity firms to backstop the activism market in the way they do in the U.S. and increasingly Japan and do you see much pushback from the government especially with M&A involving international PE firms?



It's not obvious yet, but the private equity market is pretty mature in Korea. There is a lot of dry powder and a lot of talent, and the overall infrastructure is already there. There are no meaningful restrictions for private equity to conduct M&A on activist targets. In fact, the government relaxed the capital requirement for cash deposit for tender offers to boot M&A. So that actually helps private equity get involved in take-private deals.

So far, there haven't been any really significant cases where private equity got involved with the activist. But there have been cases where the activist started the campaign and private equity stepped in as a white knight, like at Osstem Implant. The company was fully taken private, so the activists also made money.



What other ways does the Korean market distinguish itself?



I would just highlight the active grassroot actions taken by small retail shareholders in Korea. That is really the key difference between Korea and other markets. There's a lot of retail investors and they are gathering powers through online platforms, making their voices heard at companies, taking legal action and even demonstrating. Korean investors are angry. They are, you know, trying to protect their rights and that's really spreading pretty quickly.

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What keeps GCs up at night?

IN-DEPTH: Align Partners on the changing face of activism in South Korea

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Diligent

Blog

What keeps GCs up at night?

IN-DEPTH: Align Partners on the changing face of activism in South Korea

SolutionsSolutions

ResourcesResources

CompanyCompany

Your Data Matters

Solutions

Resources

Company