Board meetings ‘at risk’

Corporate Boards and other bodies are facing the growing threat of their confidential meetings being leaked, leaving directors and their organisations increasingly exposed to financial, reputational, legal, regulatory and other consequences.

The increased risk of confidentiality breaches in board meetings comes following the COVID-19 pandemic-related shift to more to virtual meetings and the ability to record them, with or without permission, using smart devices including phones and watches, and note-takers which utilise artificial intelligence (AI).

Experts are recommending that the private sector and governments should establish and implement practical governance controls to safeguard confidential conversations.

The issue was the focus of a webinar titled Confidential Meetings Are No Longer Guaranteed To Be Private: Is Your Boardroom Secure?

It was hosted last week by RISSCO, an international firm which offers risk management services, including in CARICOM, and featured a conversation between RISSCO chief executive officer and founder Antonio Ayala, and Carmel Haynes, executive director of BIBA, the Association for Global Business.

They agreed that while the risk of information from confidental meetings being leaked always existed, it had grown exponentially because of the use of more virtual meetings
 smart technology.

Haynes, who is also a director of the Caribbean Corporate Governance Institute, highlighted the impact of COVID-19 on meeting practices, leading to the rise of virtual assistants and the need for AI policies.

Ayala said the growing threat from leaked meetings prompted his company to introduce its Confidential Meeting Protection Framework, which includes protocols and devices to manage these risks.

For Haynes, the main takeaways from the discussion were: The risk of potential leakage of confidential information from board meetings is nothing new, but the ability for this to occur intentionally or unintentionally has risen exponentially with virtual meetings and the seamless integration of AI notetakers becoming the norm and not the exception.

 Boards must be prepared to proactively manage the risk of unauthorised recordings through setting policies and ensuring accountability whether required by regulation or not.

 Loss of confidentiality can cause reputational harm that undermines trust not only among directors but can also cause a lack of confidence in the organisation among external stakeholders.

 A loss of trust among directors can lead to poorer quality of discussions, deliberation and decision-making as board members fear their words being taken out of context beyond the boardroom or having themselves linked to unpopular perspectives by the media or in the public eye.

Ayala said: “Confidential meetings are no longer automatically private. For many years, board executive committees, Government institutions, Government security agencies, have been operated with an implicit assumption that what we said inside the meeting room would stay inside the meeting room.

“But honestly today, that assumption is under pressure, and that is not just a theoretical point of view. This . . . is not about gadgets or fears, it’s about governance, responsibility, fiduciary judgement, reputational exposure and the quality of decision-making in an environment where confidentiality of conversations can no longer be taken for granted.

“We have been seeing that in the past year there have been many cases, many examples, where conversation in the meeting room has been leaked and that has exposed the people in that meeting,” he added.

Haynes underscored the several consequences that could result from a breach of corporate board confidentiality.

“Obviously, a director has a fiduciary duty of care to the company, and the board of which they are a director, and therefore, when you have that loyalty to the organisation, if there’s an unauthorised exposure of confidential discussions, that can be seen as a breach of those duties, and then it can create reputational risk, not only for the organisation itself, but the other stakeholders, depending on what was leaked,” she noted.

“You might be opening up your fellow directors to litigation. So, this breach can have a very serious consequence from a legal standpoint. And then, of course, directors become wary of discussing sensitive matters at the board.

“You have some directors who will then perhaps abstain from votes. So then it really affects the governance of the board and the ability for the board to make certain strategic decisions that are in the best interest of the organisation.”

Haynes continued: “It can impact investor confidence at a publicly listed company, especially if what is leaked cast the directors in an unfavourable light, or even maybe the chairman in an unfavourable light.”

Ayala urged organisations to take steps to protect themselves from the fallout highlighted by Haynes and other possible negative impacts.

“One of the things that we have seen . . .  is that most organisations, private and government institutions, they have the awareness, they understand the problem, but they don’t move from the awareness to establish the controls to protect [their organisations from] those risks that they believe are important,” he observed. (SC)

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