The year 2025 presents a complex risk landscape for global supply chains. From geopolitical tensions and climate-related disasters to evolving regulations and cybersecurity threats – businesses must stay ahead of the curve to maintain operational resilience.

Geopolitical Tensions and Trade Barriers

Recent trade conflicts, particularly the tariffs reintroduced by former President Donald Trump, are reshaping global supply chains. These tariffs increase production costs and force companies to rethink sourcing strategies. Industries like automotive and electronics are especially vulnerable due to their reliance on international suppliers.

Climate Disasters and Environmental Disruptions

Climate change is accelerating the frequency and severity of natural disasters. In early 2025, wildfires in the U.S. led to evacuations, power outages, and road closures, severely impacting supply networks. Experts warn that extreme weather events will increasingly disrupt ports and logistics hubs in cities like New York, Beijing, Boston, and Tokyo.

Rising Regulatory Pressures and Compliance Challenges

Organizations are facing a surge in global regulations focused on transparency, sustainability, and ethical sourcing. Laws such as the Dodd-Frank Act require companies to verify that their products are free from conflict minerals. Non-compliance can result in heavy penalties and reputational damage.

Cybersecurity Threats to Critical Infrastructure

With growing digital interconnectivity, supply chains are more exposed than ever to cyberattacks. Hacker groups are increasingly targeting logistics and infrastructure systems, causing significant downtime. Businesses must invest in robust cybersecurity protocols to mitigate these risks and maintain continuity.

Supplier Insolvencies and Financial Volatility

Global economic instability is driving supplier bankruptcies, which can trigger widespread disruption. Companies need to monitor the financial health of their partners closely and establish contingency plans or alternative suppliers to safeguard operations.

GRC Software: A Strategic Shield Against Uncertainty

Governance, Risk, and Compliance (GRC) software is becoming essential for modern risk management. These platforms provide real-time visibility into potential risks, streamline compliance workflows, and enable data-driven decision-making. Especially in uncertain times, GRC solutions empower organizations to build more resilient and agile supply chains.

Conclusion: Navigating 2025 with Resilience and Foresight

As supply chain risks multiply in 2025, proactive and strategic risk management is no longer optional – it’s a necessity. From geopolitical upheaval to regulatory tightening and cyber threats, businesses must evolve to stay competitive.

GRC software stands out as a critical enabler of supply chain resilience. By combining real-time risk intelligence, compliance automation, and cross-functional governance, it helps organizations turn uncertainty into a manageable—and even strategic—advantage.

What Trends Are Shaping Corporate Governance in 2025?

In 2025, sustainability in corporate governance is no longer just a trend but a key element. Companies are integrating sustainable practices into their core operations to ensure long-term success and fulfill social responsibility. At the same time, digital transformation plays a crucial role—from implementing data-driven decision-making to adopting new technologies. Another important trend is the growing focus on diversity and inclusion. Companies that foster diversity in their leadership benefit from varied perspectives while strengthening their culture and innovation capabilities. These trends reflect the urgent need to respond to a rapidly changing world and take strategic action to remain competitive.

Key Insights

• Sustainability will be a key element of corporate governance in 2025.
• Digital transformation is crucial for data-driven decisions and technological efficiency.
• Diversity and inclusion offer companies creativity and strategic advantages.
• Artificial intelligence and blockchain are revolutionizing corporate governance tools.
• Integration of ESG principles is a must in the corporate strategy of 2025.
• Regular review and adaptation of best practices ensure long-term competitiveness.

Sustainability as a Key Element

In 2025, sustainability will undoubtedly be the cornerstone of corporate governance. Companies are no longer just economically responsible but are increasingly adopting environmentally friendly and socially just business practices. This shift drives both brand loyalty and access to new markets. Implementing sustainable strategies allows companies to positively impact both the environment and society while securing a long-term competitive advantage. From resource conservation to supply chain management and product selection, all aspects aim to contribute to achieving the UN goals. Those who want to stay competitive in 2025 must act more sustainably than ever before.

The Role of Digital Transformation

Digital transformation plays a pivotal role in shaping corporate governance in 2025. Companies face a wide array of new technologies that not only increase efficiency but also open up entirely new ways to monitor and control business processes. The implementation of artificial intelligence and big data analytics enables well-informed decisions and more precise risk management. Additionally, blockchain offers unprecedented possibilities in terms of transparency and security. However, the technological shift is more than just an investment in new tools—it also requires a cultural shift within organizations. It’s about fostering a digital mindset and encouraging open exchange across all levels of hierarchy.

Significance of Digital Transformation

• Implementation of AI and Big Data
• Blockchain for transparency
• Cultural change within organizations

What New Tools Support Effective Corporate Governance?

In 2025, innovative tools are essential for effective corporate governance. Artificial intelligence is revolutionizing data analysis, offering invaluable insights into complex business decisions. Blockchain technologies provide enhanced transparency and security by making data manipulation virtually impossible. This innovation is particularly valued for improving traceability of information. Cloud-based solutions offer unmatched flexibility, allowing companies to remain agile in a constantly changing environment. Using these tools helps businesses work efficiently and respond proactively to challenges.

Artificial Intelligence for Data Analysis

Artificial intelligence (AI) is revolutionizing data analysis in corporate governance and offering unprecedented opportunities for companies in 2025. AI can efficiently process large volumes of data and detect patterns that would otherwise remain hidden. Moreover, AI systems are capable of making accurate predictions and supporting informed decisions. Companies leveraging this technology enjoy a significant competitive advantage by responding to market changes more quickly and effectively. Transparency and security are enhanced through precise data analysis, leading to stronger stakeholder trust. Those who recognize and implement AI’s potential lay the foundation for future-ready corporate governance.

“Artificial intelligence is revolutionizing data analysis, offering precise predictions and enhancing transparency.”

Blockchain for Transparency and Security

The revolution of corporate governance is imminent, and in 2025, blockchain plays a central role in ensuring transparency and security in business operations. The decentralized nature of this technology reduces data manipulation and helps prevent fraud. Companies use blockchain to manage stakeholder information efficiently and build trust. Especially in combination with other digital tools like artificial intelligence, blockchain opens up new opportunities to increase efficiency and compliance. A transparent system based on traceable and secure transactions is key to successfully implementing corporate governance in the modern business world.

• Use of blockchain technology
• Improved transparency and security
• Enhanced compliance efficiency
• Trust through traceable transactions

Cloud-Based Solutions for Flexibility

In 2025, cloud-based solutions are bringing fresh momentum to corporate governance. They offer unmatched flexibility, which is essential for companies to respond quickly to market changes and design efficient processes. Especially in terms of data availability and real-time analysis, they are invaluable. Companies can access up-to-date data, make agile decisions, and thus increase competitiveness. Additionally, cloud-based services support collaboration among international teams, further boosting efficiency. In an era where adaptability is key to success, these solutions prove indispensable. They represent the future of corporate management and align with ongoing digitalization and the demand for greater flexibility.

What Are the Key To-Dos for Companies in 2025?

In 2025, companies face the exciting challenge of enhancing their corporate governance with a focus on sustainability and technology integration. A key to-do is the integration of ESG principles (Environmental, Social, Governance) into corporate strategy to meet growing expectations from investors and society. Additionally, training and development of leadership is essential to stay up-to-date with the latest trends and effectively implement innovative solutions. Finally, companies should optimize their risk management strategies by leveraging modern tools and technologies to proactively identify and mitigate risks. These steps not only secure market position but also promote long-term sustainability and growth.

Integration of ESG Principles

In 2025, the integration of ESG principles will be more central than ever in corporate management. Sustainability, social responsibility, and good corporate governance form the foundation for future-oriented action. Companies that embrace these principles benefit not only from a better image but also from economic success. Integrating ESG into company-wide strategies requires clear communication and assigned responsibilities to achieve goals efficiently. The challenge is to embed ESG concerns into everyday operations and create lasting value.

Training and Development of Leadership

In the ever-evolving world of corporate governance, leadership training and development is an indispensable element. 2025 emphasizes not only strengthening technical skills but also promoting competencies in sustainable action and diversity. Continuous adaptation to digitized work environments calls for a new learning culture. It’s about creating an environment where knowledge is openly shared and leaders act as role models to spread best practices throughout the organization. Ultimately, well-informed and adaptable leadership figures are the ones who successfully navigate companies and set the course for future challenges. Investing in human capital has never been more crucial.

Optimizing Risk Management Strategies

In 2025, optimizing risk management strategies is a top priority. Companies must adapt to rapidly changing conditions and proactively identify potential risks. Effective risk management is key not only to being better prepared for challenges but also to securing competitive advantages. Technological tools like artificial intelligence and big data play a vital role in this. They enable more precise risk analysis and help develop strategies that ensure both short-term and long-term business success. Companies should act risk-aware and implement flexible solutions to manage unexpected disruptions.

How Can Companies Continuously Improve Corporate Governance?

To continuously improve corporate governance in the dynamic business world of 2025, companies need strategic approaches. A central aspect is the regular review and adaptation of best practices. This includes keeping up with current trends and legal requirements. Furthermore, promoting a culture of open communication can strengthen collaboration between teams and departments, contributing to problem-solving and innovation. Establishing feedback loops between companies and stakeholders is also crucial. These provide new perspectives and enable sustainable decisions. Such measures allow companies to not only enhance their governance standards but also strengthen and expand their long-term competitiveness.

---

Key Aspects	Benefits for Companies
Regular Review	Increased flexibility
Open Communication	Strengthened innovation
Feedback Loops	Sustainable decision-making

Regular Review and Adaptation of Best Practices

In 2025, corporate governance is more dynamic than ever, making regular reviews and updates of best practices essential. Companies must constantly evaluate their governance strategies to effectively integrate sustainability, tech innovation, and an inclusive leadership culture. This not only keeps them agile but also optimizes competitiveness and market reputation. Implementing structured evaluations, with clearly defined goals and feedback mechanisms, strengthens the organizational backbone and builds stakeholder trust. Ultimately, this adaptability is what drives companies forward and prepares them for future challenges.

Promoting a Culture of Open Communication

A culture of open communication is key to successful corporate governance in 2025. Companies need to create an environment where employees feel safe and valued to share their opinions. Transparency plays a crucial role here. Regular meetings and platforms for exchanging ideas help build a shared understanding and trust. Leaders must encourage feedback and listen actively to drive innovation. Promoting open communication supports not only management but also improves the overall work environment and satisfaction of everyone involved.

Establishing Feedback Loops with Stakeholders

In 2025, establishing feedback loops with stakeholders becomes a critical element of successful corporate governance. Companies should ensure ongoing, open, and constructive dialogue with their stakeholders. This requires not only a modern technological infrastructure but also a willingness to respond to stakeholder needs and concerns. Regular feedback rounds help identify areas for improvement and create a reliable basis for strategic decisions. This allows companies to become more agile and adaptable in a dynamic business world. Building trust through transparent communication strengthens stakeholder relationships and fosters long-term collaboration.

FAQ

What role does sustainability play in corporate governance in 2025?
In 2025, sustainability is an indispensable key element of corporate governance, as companies integrate sustainable practices to ensure long-term success and social responsibility.

Why is digital transformation important for corporate governance?
Digital transformation is vital as it enhances efficiency through new technologies such as AI and Big Data, enabling innovative monitoring and control processes.

What new tools effectively support corporate governance?
Artificial intelligence revolutionizes data analysis, blockchain ensures more transparency and security, and cloud-based solutions offer unmatched flexibility.

What are the most important actions for companies in 2025?
Key actions include integrating ESG principles, training and developing leadership, and optimizing risk management strategies.

How can companies continuously improve corporate governance?
Companies should regularly review and adapt best practices, promote a culture of open communication, and establish feedback loops with stakeholders.

The term GRC stands for governance, risk management and compliance. It can be described as a comprehensive set of capabilities that assists an organisation in achieving its objectives by ensuring fairness and integrity at all levels. The governance section encompasses the organisational activities which essentially include roles, responsibilities and expectations of the individuals who hold management positions as well as stakeholders. Risk management pertains to how well an organisation is prepared to address and mitigate both foreseeable and unforeseeable risks. Compliance refers to the organisation’s adherence to relevant laws and regulations, bylaws, organisation’s internal policies including those related to security controls.

Other domains of GRC

While governance, risk management, and compliance are the core areas of focus in GRC as the term implies, the significance of GRC is evident in a number of other interconnected areas of an organisation including IT governance, finance and audit, human resources, operations and supply chain to name a few. By being influenced by GRC, IT governance primarily relies on apposite frameworks, procedures, and policies which ensure that the organisation aligns with its objectives and compliance requirements. It is evident that the entire spectrum of finance and auditing within an organisation is profoundly influenced by GRC since the latter through different mechanisms such as internal control systems and auditing practices helps the organisation pass the test of transparency, accuracy and compliance with the relevant laws and regulations. GRC also holds significant relevance in various areas of operations and supply chain management, including product quality control, supply chain sustainability and vendor management. Moreover, the functions of human resources of an organisation can also be impacted positively by GRC, where the latter influences tasks that fall within the remit of human resources including employee diversity and inclusion, conduct, ethics, and the well-being of the employees.

The inevitable link between risk management and business continuity management

Risk management is often considered the heart of GRC. While the task of risk management is to mitigate or tackle problems, business continuity management obliges an organisation to stick to its advanced plan and act in accordance with it in situations where the organisation faces the worst possible results. The more robust risk management practice an organisation inculcates into its overall management system, the better, judicious, and measured planning and preparation it can come up with in dealing with unwanted results of its own activities, cyber-attacks, natural disasters, pandemics, etc. To put it differently, strong risk management in place helps an organisation understand what areas it should prioritise in its business continuity management in the event of any looming challenges. Business continuity management on the other hand acts as a strong weapon in mitigating risks. Risk management and business continuity management are so interdependent and considering them in silo may cause the organisation harm.

To effectuate business continuity management, organisations require overall monitoring and testing, and cross-functional collaboration on a consistent basis hence the absence of any risk management strategy in place and/or any flawed or inaccurate risk management can sink the organisation. The unforeseen recent demise of the two US banks (Silicon Valley Bank and Signature Bank) and a Swiss bank (Credit Suisse) due to poor risk management is a wake-up call for organisations not only within the financial industry but also in other industries such as health, food, and more, regardless of the organisation’s size.

Successful GRC implementation

Organisations are obligated to consider GRC components through various mechanisms in order to ensure smooth business operations and prevent any controversy regarding the functionality of their organisation’s GRC. The benefits of adopting a GRC strategy are enormous, and it would certainly not be an exaggeration to say that organisations lacking a well-defined GRC strategy in place are more likely to face collapse compared to those that do. Regarding the key to a successful well-defined GRC strategy, Joanna Grama, director of cybersecurity and IT GRC programs for EDUCAUSE said: “Implementing a framework will never be successful unless the organisation’s culture evolves to support GRC activities.”

There may be other ways to successfully implement GRC in an organisation, however, choosing GRC software tools, has been proven to be the most effective approach.

The digital transformation has fundamentally changed the landscape of Governance, Risk, and Compliance (GRC). Companies face new challenges arising from technological advancements, globalization, and changing regulatory requirements. In this whitepaper, we discuss how the GRC market has evolved and the role of innovative solutions like Zazoon in helping businesses navigate modern GRC challenges.

1. The Evolution of the GRC Market

1.1. Growing regulatory requirements

In recent years, numerous countries and industries have tightened their regulatory requirements to ensure transparency, integrity, and stability of businesses and financial markets. This development has led companies to continuously adapt and update their GRC strategies.

1.2. Globalization and interconnectedness

The globalization and interconnectedness of businesses lead to increased complexity in the GRC field. Companies must be able to understand and comply with country- and industry-specific regulations and guidelines while efficiently and effectively managing their international business activities.

1.3. Technological advancements

The rapid progress of technologies such as cloud computing, artificial intelligence (AI), and big data has created new opportunities and challenges in the GRC field. Companies must adapt and learn to effectively use these technologies to optimize their GRC processes and meet the demands of an ever-evolving digital landscape.

1.4. Data protection and cybersecurity

The increasing digitization of business processes and the growing importance of data have made data protection and cybersecurity central topics in the GRC field. Companies must ensure the integrity of their systems and the security of their customer data while simultaneously complying with legal data protection requirements.

2. The Role of Innovative GRC Solutions

2.1. Automation and efficiency

Innovative GRC solutions, like Zazoon, enable companies to efficiently manage their compliance, risk, and control requirements by reducing manual tasks and unstructured workflows. Through automation and centralized data management, companies can save time and resources and minimize human error.

2.2. Integration and flexibility

Modern GRC solutions provide an integrated platform that allows for effective management of various aspects of GRC, such as risk management, internal control systems, policy management, data protection, process management, supplier management, and ESG. A flexible and adaptable GRC solution supports companies in adapting to changing regulatory requirements and business environments without affecting their existing processes and systems.

2.3. Data analysis and decision-making

Innovative GRC solutions enable companies to effectively process, analyze, and derive valuable insights from large volumes of GRC-related data. By utilizing advanced data analysis techniques and visualization tools, companies can make informed decisions and optimize their risk management and compliance strategies.

2.4. Scalability and cloud computing

Modern GRC solutions offer scalable infrastructures and cloud computing options, enabling companies to effectively manage their GRC processes and adapt to growing demands. Cloud-based GRC solutions provide flexibility and scalability while meeting security and data protection requirements.

The digital transformation has fundamentally changed the GRC landscape and created new challenges for businesses. To be successful in this dynamic environment, companies must utilize innovative GRC solutions like Zazoon to help them efficiently and effectively manage their compliance, risk, and control requirements. With the right GRC solution, companies can optimize their processes, make informed decisions, and successfully adapt to constantly changing regulatory requirements and market conditions.

Your path to success

We invite you to learn more about the benefits of Zazoon and discover how our GRC solution can help you master the challenges of digital transformation. Contact us today to learn more and schedule a personal demo appointment. Let’s work together to shape your path to GRC success!

Environmental consciousness has become a major non-financial factor for businesses over the past few decades. The term ‘ESG’ entailing environmental, social, and governance factors, is employed to weigh how far companies have progressed and will be progressing in the future on all these determinants of their sustainability. The score of their sustainability does play a vital role for the investors in the process of their investment screening.

ESG relevancy for Business

While the other two determinants, social and governance of companies’ sustainability are in no way to be assumed less important, the environment is of the essence. Environmental factor has been able to gain more traction in the business world due to the mass awareness of climate change and global warming. Environmental factors do not affect only businesses but also our society, country as well as the world at large. The number of business industries that are being affected directly or indirectly by the consequences of climate change, is rising briskly. Such rapid environmental changes have been worrying many established businesses in the market along with the small ones. It has been found in a study that the U.S. alone could lose USD 520 billion across 22 sectors due to global temperature rise.

The concern as regards climate change and global warming has become a key factor for investors. In less than two decades, ever since the United Nations Environment Programme (UNEP) published a report ‘A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment’, in the year of 2005, ESG investing which is known as socially responsible investing has evolved into a USD 35 trillion industry. According to the money managers who oversee one-third of the total U.S. assets under their management, assets managed in portfolios labeled ‘ESG’ are expected to reach USD 53 trillion by 2025. (Bloomberg Intelligence, ESG assets may hit USD 53 trillion by 2025, a third of global AUM, published on: 23 February 2021)

The above figures manifestly show the growing desire of investors to create a positive impact on society, the country, and the world at large through their investments. These figures also reveal an exponential sense of ethics and fiduciary responsibility amongst the investors.

Such inclination of the investors obliges businesses to score well in ESG rating. A systematic and long-term plan can help them score well. It will also help them to see where they stand in the market in comparison with their peers as regards the sustainability of their businesses.

The ‘Green Blueprint’

Businesses may opt for a ‘Green Blueprint’ that will be premised upon ‘zero tolerance’ against any business activity that is detrimental to our environment, and will entail the below:

1. compliance with the national and international laws and regulations relating to environmental issues (different measures have been taken at the national, regional, and international level to tackle the climate crisis, such as the European Parliament has recently voted to set a 2035 deadline for zero-emissions cars and vans which is being seen by many as a huge step forward for climate action, air quality and the affordability of electric vehicles. Green group Transport & Environment called on EU environment ministers to confirm the effective end date for sales of new combustion engines when they meet on 28 June 2022. (Transport & Environment, EU Parliament backs 2035 end date for combustion engine cars, published on 8 June 2022));
2. creating consumer awareness of climate change and global warming which would drag the consumers towards green products (McKinsey research shows that more than 70 percent of customers would pay an additional 5 percent for a green product if they were satisfied that it met the same standards as a non-green alternative);
3. low-carbon business strategy;
4. less dependency on the natural resources than its peers;
5. having apt financial arrangements to deal with rising costs that ensue from climate change.

The proposed ‘Green Blueprint’ can help businesses become more sustainable and be well ahead of their peers in the market.

Closing thoughts

In an age where environmental consciousness has become a paramount concern, the significance of ESG (Environmental, Social, and Governance) factors cannot be overstated. While social and governance elements hold their own importance, the environment takes center stage due to escalating awareness of climate change and its global implications. The rapid and widespread impacts of environmental shifts on businesses and society have prompted a surge of concern among investors. This has driven the growth of ESG investing, with assets under management reaching staggering figures, underscoring a growing ethical responsibility among investors to make a positive societal impact.

This growing investor inclination compels businesses to prioritize high ESG scores, necessitating long-term strategies aligned with sustainability. A ‘Green Blueprint’ emerges as a potential solution, emphasizing strict compliance with environmental laws, fostering consumer awareness, adopting low-carbon strategies, resource efficiency, and prudent financial planning for climate-related costs. Embracing such a blueprint can empower businesses to lead in sustainability and outpace competitors, forging a path towards a more environmentally conscious and resilient future.

The whitepaper emphasizes the significance of the board of directors and its composition in corporate governance. Whilst the concept of corporate governance varies across jurisdictions, there is a consensus that the board of directors plays a crucial role in creating value for the company. The organizational structure and legal framework of corporate governance differ between countries, with Switzerland allowing both one-tier and two-tier structures.

Corporate Governance

While it is next to impossible to define ‘corporate governance’ from a universal point of view, there is, however, complete unanimity on the fact that the composition of the board of directors and its role are the key elements of corporate governance. As per 49.7 percent of the respondents participated in a survey held in Switzerland in the year 2016, the board of directors, especially the process of its composition, has a colossal impact on the ultimate value creation of the company. The organizational structure (in particular the structure of the board of directors) and legal framework of corporate governance are varied. While one-tier organizational structure (meaning that the tasks of operations and supervision are managed by the same instance) is adopted by the companies in the US, Switzerland opts for a rather flexible slant that leaves companies with the options of one-tier and two-tier organizational structures (where two-tier organizational structure means the tasks of operations and supervision are managed by different instances). Differences as regards the legal framework of corporate governance between countries are also patent. The Swiss legal framework obliges the board of directors to act in the best interest of the company though the directors are elected by the shareholders (Forstmoser, 2005), on the other hand, the legal framework of the US sticks to the notion that the board of directors will only act in the best interest of the company’s shareholders (Millstein, Gregory, Altschuler and Di Guglielmo 2011). The positioning of the board of directors, which is between shareholders and stakeholders of the company, is a crucial juncture. The board, being in its position, has to ensure proper ‘checks and balances’ between the shareholders and stakeholders at all times. Research corroborates that the task of ensuring ‘checks and balances’ does sometimes become very difficult for the board which could either be for an inclination toward the shareholders or the stakeholders, where in either case, such inclination questions the integrity of the board directors. It is therefore imperative to underscore the process through which the board directors are elected and re-elected.

Swiss Code of Obligations

Pursuant to Article 710 of Part Five of the Swiss Code of Obligations, board directors are elected for a stint of three years, unless the articles of association of the company stipulate a tenure that does not exceed six years. What it means is that the stint of the office must not exceed six years. This provision also mentions the possibility of re-election. Since 2014, subject to other additional provisions, each company board director in Switzerland, has to be individually elected on an annual basis. Though this requirement of annual election of the board directors seems to have made the AGM agendas significantly longer, however, research shows that the practice of annual election allows investors to have differing views on each board director which can benefit the company. It has also been found that the shareholders have appreciated the system of annual election. The discrepancy as regards board election approval has increased from 3.4 percentage points in 2010 to 6.5 percentage points in 2016 (Schneider, Wagner, and Wenk 2016). An interesting nexus has also been encountered between total shareholder return and the board election outcomes, when shareholders lost wealth in the previous year, the election yields approval rates one percentage lower on average though the truth of the matter is that elections of the board members are barely contested (Wagner, Bernasconi 2016).

Diversity in the Board of Directors

The current Swiss legal framework does not provide any rules on the composition and diversity of the board of directors. FINMA, however, has made many additional rules that are to be followed by financial sector companies in Switzerland. The idea of setting up these additional rules is to ensure and uphold the independence of the board and committee and the minimum availability of certain skills that the board directors ought to have. Financial sector companies are required to have a risk committee in addition to the audit and composition committee.

The two most striking issues found in the ongoing corporate governance practices in Switzerland are the independence of the board of directors and their availability (Wagner, Bernasconi 2016). These hindrances may put the board on the back foot by making the directors less ambitious and disengaging from the steps that would be beneficial for the company as a whole. Though no requirements in these regards exist for regular companies listed in Switzerland, guidelines entailing minimum requirements along with other important factors, have been set out for financial sector companies by FINMA. One of such minimum requirements is that at least one-third of all board members must be independent, members being independent refer to those a) who are not working or have not worked for at least two years in any function at the company, b) who have not been involved as lead auditor for the company, c) who do not have any substantial business relationship with the company.

Gender Quota

Another concerning factor in the ongoing corporate governance practices in Switzerland is the low participation of female directors in the board. However, the good news is that a new provision (article 734f CO) as regards gender quota has been introduced. The implementation of this provision works on a comply-or-explain basis. Though the new provisions have already taken effect in Switzerland, however, they are still subject to long transition periods. As per this gender quota provision, each gender must be represented on the board of directors at least by 30% starting from 2026 and by 20% in the executive management starting from 2031.

Though the role of the board of directors is intertwined with a lot of other important factors such as board directors’ knowledge about the industry environment, board directors’ homework and research before every meeting that they take part in, expectations of the shareholders and stakeholders from the board, nonetheless, the way the board of directors is composed has the greater impact on what its role would be and how integriously it would be managing and overseeing the operations of the company.