Senior Client Partner, Head of the Board Effectiveness Practice
Leadership
Regulation Overload?
Directors play catch-up on the mounting number of new global rules, creating a host of new worries.
March 31, 2025
The Latest Regulation You Didn’t Know About—But Need To
They’re the kind of details that can keep a director up at night: Is the company complying with various regulations around AI? Is it making the proper disclosures on packaging waste? Has it made the legal moves required by recent executive orders out of the current US administration?
From Washington, DC, to Brussels and dozens of places in between, governments are flooding the zone with regulations, and company leaders are struggling to keep up. Indeed, in a recent study, 85% of business leaders said compliance requirements across the globe have become more complex in the last three years, and that this has held back their ability to help drive growth. “What we see is growing frustration of boards with the time they’re spending dealing with the impact of regulations,” says Doug McAllister, a senior client partner and member of the UK Board and CEO Practice at Korn Ferry.
In some ways, board watchers say, regulators seem to seek to regulate risk out of the system—an approach that runs counter to the notion that you must take some risk to innovate. But as companies face a deluge of regulations—from financial rules around third-party providers in the UK to data-privacy practices in the US—boards are spending more and more time dealing with them. After all, directors can face personal liability for violating employment laws or environmental regulations.
To stay up to date, directors should take the time to educate themselves on industry-specific regulation. And they should look to management teams to keep them informed of key changes. “They need to get clarity on which board committee is going to do the heavy lifting on the topic,” says Anthony Goodman, head of the Board Effectiveness Practice at Korn Ferry. For example, he says, directors will need to ask if they’ll require assistance from a risk committee or a public affairs committee, or whether a given issue will fall to one of the traditional board committees. It’s also critical for boards to make sure the right members of management come to committee meetings to discuss the issues. For new ESG requirements, for instance, the head of regulatory affairs or chief sustainability officer is probably in a better position than the COO to update the board.
When directors do a deep dive in board meetings on different businesses or geographies, they should ask management team members to explain how they’re monitoring and dealing with regulatory change and whether it’s creating a risk—or an opportunity—for the business. After all, effective compliance coordination can lead to better decision-making, more transparency, and increased consumer trust. Stricter emissions regulations, for example, helped some automakers who innovated with hybrid technology to get ahead.
At the same time, it’s important for companies not to make decisions only for the short term. “A policy could change next week, so boards have to stay focused on what they can control in an uncontrollable environment,” says Tierney Remick, co-leader of Korn Ferry’s Global Board and CEO Services practice.
The good news: With the deluge of regulations in recent years, the US and EU are seeking to reduce the regulatory burden and stimulate more growth among companies, Goodman says. That could lead to lower compliance costs, faster decision-making, and other efficiencies. For example, McAllister says, in the UK, which seems to be focused on a growth agenda, leaders are hoping policies will change to create favorable environments for innovation. The trick, he adds, will be for the government and the business sector not to overreact in the face of failure. After all, it’s part of growing.
For more on how boards can handle regulations, read our article about How Board Chairs are Leading in a Changing World.
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