Questions and Insights for Boards Concerning Trends, Geopolitics and Regulation

The pace of changes in regulations, combined with increased market volatility has come at lightning speed during the first quarter of 2025, and will likely add to already pressing board agendas. Boards should watch for an anticipated uptick in M&A activity, emerging technologies, shifting geopolitical dynamics and changes in the regulatory landscape.

Our Weaver team of professionals has developed the following key topics that are trending with boards to help ensure meeting agendas address the latest in corporate strategy, emerging risks and governance developments.

What should boards consider when striking a balance between company insiders and independent directors?

Insiders bring deep operational knowledge, while independent directors offer fresh perspectives to enhance decision-making. Finding the right mix strengthens governance, mitigates groupthink through a broader set of viewpoints, builds resiliency and drives long-term success. Striking a balance, however, is not always straightforward. Boards must navigate unique challenges that come with insider influence, such as potential conflicts of interest, internal bias and sometimes blurred lines between oversight and management. Below we assess ways to strike a balance, review challenges of board insiders and evaluate best practices to balance insider influence.

Striking a balance: To strike the right balance of insider and independent directors, boards should consider:

• Institutional knowledge: How beneficial is it to have a deep understanding of company culture, history and strategy?
• Alignment of interests: Are board members invested in the company’s long-term success?
• Efficient communication: Can board members effectively bridge the gap between management and the board?
• Strategic decision-making: Do members provide timely, informed insights to enhance agility?

While insiders bring valuable knowledge, there can be a tendency to limit objective decision-making and oversight due to unintended bias. By fostering a strong mix of insiders and independent voices, boards can enhance oversight, encourage healthy debate and drive sustainable success. Answering the following questions can help to proactively address insider objectivity concerns:

• Conflict of interest: Are insiders prioritizing the company’s best interests in both board and operational roles?
• Reduced independence: Does dual leadership impact the board’s ability to objectively assess management and enforce accountability?
• Dominance concerns: Is insider representation balanced to encourage diverse perspectives and innovative thinking?
• Potential bias: Are insiders making impartial decisions in key areas like performance evaluation and succession planning?

Best practices to balance insider influences: While independent directors tend to prioritize strategic oversight, governance and risk management, maintaining a healthy insider balance can provide invaluable operational information and knowledge. It is helpful for boards to consider the following best practice questions when evaluating insider influence and balance:

• Board composition: Is there a balanced mix of insiders, independent directors and external professionals?
• Independent committees: Are key committees (e.g., audit, compensation and governance) composed of independent directors to mitigate potential conflicts?
• Clear role definitions: Are operational and strategic roles of insiders and the board clearly distinguished?
• Regular board evaluations: Is the board’s composition and its performance regularly assessed to prevent undue insider influence?
• Robust succession planning: Do insiders actively participate in planning leadership transitions while remaining open to external evaluations and recommendations?

What key economic trends should boards be following that impact strategy?

Based on the economic outlook for 2025, boards should be assessing industry-specific trends and monitoring the following to keep abreast of emerging issues impacting strategy:

• Trade policies and tariffs: Higher U.S. tariffs on imports could slow global economic growth and elevate inflation.
• GDP: Current growth projections range from 2.1% to 2.3% for 2025, though economic policies are sure to have an influence.
• Inflation and consumer behavior: The inflation rate for February was 2.8% and is expected to remain steady for the remainder of 2025. Monitor trade and tariffs, which can certainly impact the inflation rate.
• Interest rates: Following the 10-year Treasury yield and fed funds rates will be helpful in determining financing cost and interest/fees charged to customers. Current economic projections indicate a median federal funds rate of 3.9% for 2025. Certain economic indicators like slowing job growth and tightening credit could trigger rate cuts later in the year.
• Housing: Monitoring building permits and construction activity will provide boards with economic trends in housing and related sectors. At this point, housing is expected to increase 2% during 2025.
• Credit conditions: Improving credit conditions are expected to contribute to economic growth in 2025, though uncertain regulatory policies may provide for credit instability, thus impacting the markets.
• Supply chains: Reshoring and nearshoring will help companies drive how supply chains can reduce geopolitical risks and ensure stability, resilience and cost-effectiveness.
• Decentralized finance (DeFi) and digital payments: Digital currencies and fintech are sure to reshape how financial transactions are processed and impact cash flows.

What current M&A trends could impact strategy for the remainder of 2025?

After the November 2024 elections, there was a lot of anticipation of M&A activity in the first half of 2025. As we enter the post 90-day inauguration timeframe, the M&A activity has been modest primarily due to uncertainty of how key economic policies will be framed.

One key indicator worth watching is the significant amount of uncommitted capital Private Equity (PE) firms had entering into 2025. Dealmakers are anticipating more deregulation moving forward, which should help spur more activity later in 2025 and into 2026. Keep an eye on the following industry sectors that are trending:

• Technology: Look for AI to continue as a hot play as companies seek to gain competitive advantage in their product and service offerings. At this point, big tech appears to be lagging in M&A activity versus other mid-range and smaller emerging companies.
• Financial services: Community and regional bank mergers are expected to continue. We may also see large bank activity with deregulation on the horizon. Expect more M&A traction with fintech and crypto. Crypto will be at the forefront as a regulatory framework takes shape around the crypto currencies. The insurance industry will also be looking for more innovative ways to sell, underwrite, settle claims and manage portfolio risks, so we would expect movement in this part of the financial services sector.
• Energy and utilities: With increasing demand for electricity, driven by data centers powering AI and other emerging technologies, expect to see PE firms and energy companies as major forces behind M&A activity.
• Consumer and retail: Data suggests there will be an uptick in M&A activity in this sector during 2025 as competitors look to gain scale and for new revenue streams.
• Industrial manufacturing: Once the dust settles on economic policies and there is less market uncertainty, look for investments in equipment and processes that bring more efficiency. There will also be significant increases in defense spending and infrastructure, which is expected to lead to more M&A activity in this part of the industrial sector.

What areas should boards be evaluating when completing self-assessments on performance?

Boards are the cornerstone in helping companies set strategy, achieve effective governance and provide essential accountability for long-term success. Periodic self-assessments are an exceptional tool to provide invaluable feedback on board strengths, identify areas for improvement and enhance overall effectiveness. The following may be helpful to further assess your board’s strengths and areas for improvement:

Governance and leadership:

• Are board roles and responsibilities written and do they align with mission, vision and strategic goals?
• Are there other areas the board should be helping with, such as whether additional committees are needed and/or whether more long-term strategic direction is needed?

Board composition and structure:

• Does the board have a diverse mix of skills, experience and backgrounds, along with a balanced representation of independence, knowledge and stakeholders?
• Are succession planning and committee structures (e.g., audit, governance, risk, etc.) effective to support strong leadership and oversight?

Board dynamics and culture:

• Are there areas where the board can improve its collaboration and foster more open and transparent discussions?
• Are there areas where the board could challenge management more with ethical frameworks around organizational behavior and integrity?

Board meetings and decision-making:

• Are board meetings well-structured with clear agendas and are pre-meeting materials sufficient to support informed decision-making?
• Does the board ensure follow-through on action items to maintain accountability for decisions made?

Oversight of management and performance:

• Does the board provide feedback to the CEO and executives on performance and strategy without micromanaging?
• Does the board monitor key performance criteria to ensure alignment with strategic objectives?

Stakeholder engagement and communication:

• Does the board receive feedback and respond to the needs of stakeholders, including shareholders, employees and customers?
• Has the board considered and evaluated its corporate social responsibility and ESG expectations?

Risk management and compliance:

• Does the board periodically evaluate management’s assessment of financial, operational, compliance and strategic risks?
• Has the board evaluated whether there is effective planning in crisis management and responses that address unforeseen events?

Board development and continuous improvement

• Is there an orientation process for new board members and is there ongoing education and training for existing board members at least annually?
• Is there a process where board members evaluate and potentially implement best governance practices?

What are the emerging trends in governance, risk and compliance that boards should consider in 2025?

Corporate governance is taking some exciting and innovative turns in 2025. Here are key areas that are emerging:

• Governance labs: Experimental “governance labs” are emerging where boards and management test novel governance models, processes and tools. These labs serve as playgrounds for innovation, allowing organizations to trial ideas like decentralized decision-making or AI-driven governance tools before full implementation.
• Dynamic board structures: Companies are adopting flexible board structures that can quickly adapt to new challenges and opportunities. This might include temporary committees for emerging issues like AI ethics or cybersecurity and rotating board members with specific skills to match strategic needs.
• Stakeholder advisory councils: To help with decision-making, some companies are forming stakeholder advisory councils. These diverse groups provide fresh perspectives on how operations impact different stakeholders, offering insight that could be overlooked in traditional governance models.
• Virtual reality board meetings: With the rise of hybrid and virtual board meetings, companies are experimenting with virtual reality technology to create immersive meeting experiences. This allows for more engaging and interactive discussions, especially for global boards.
• Gamification of governance: Companies are exploring ways to gamify certain aspects of governance, such as training or risk management. Gamification can make traditional topics more engaging and memorable for board members.
• Enterprise risk management (ERM): While ERM has been an ongoing topic with boards, we have seen increased interest of boards ensuring that enterprise risks are properly identified, and that management has response plans to accept or mitigate the risks. Boards have relied on their risk management, internal audit and outside professional groups to help with this evaluation and communication of results.

For companies that do not have in-house experience, organizations may find it helpful to use outside professionals to help support the initiatives.

Weaver offers information and insights to help you ask the right questions and determine appropriate plans of action based on topics and trends as they unfold. Subscribe to our monthly insights for articles and information to help you review your organization’s operations and prepare for change in an uncertain world. Contact us for information about these areas of Board governance.

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