As we look ahead to 2025, it’s never been more critical for board members to understand the emerging issues dominating boardroom agendas. It is particularly essential for members of the audit committee, who manage a continually increasing and evolving list of responsibilities.

To explore current trending topics and examine what audit committees should be addressing in 2025, Women Get On Board Inc. (WGOB) hosted a virtual discussion on November 25, sponsored by KPMG, as part of the WGOB Speaker Series. Deborah Rosati, Corporate Director and WGOB Founder and CEO, kicked off the event by introducing the panel:

In their opening remarks, the members of the panel noted that audit committee agendas are packed with priorities, and the issues around the table are rapidly changing.

“It is a difficult time to be a board member and there are heavy demands on audit committees,” said Michael.

What Are the Emerging Trends for Audit Committees in 2025?

Topping the list of leading audit committee concerns is the result of the U.S. presidential election and the resounding implications on geopolitics.

“I’m thinking a lot about trade and tariffs, and how that impacts Canada,” said Janet, noting that the U.S. remains Canada’s largest trading partner.

She also highlighted concerns about potential policy changes on ESG and sustainability, as well as immigration policy, in light of the political shifts in the U.S.

Another key concern for audit committees in 2025 will be technology. While AI and cybersecurity have been hot topics this year, committee members could benefit from examining investments in technology more broadly. Organizations should be considering how and when to make such investments, as well as how to govern them.

Mergers, acquisitions, and divestitures continue to be critical issues for audit committees to understand and manage effectively. Governing major projects is also an issue topping many audit committee agendas. In addition to technology projects, committee members should be discussing how to govern large investments in infrastructure and energy, establishing what the director’s role should be in the process.

The final issue the panel highlighted? Managing the membership of the audit committee itself.

“The challenge that exists to bring on qualified audit committee members or board members is increasingly difficult,” said Michael.

He noted that more companies than ever before are struggling to find the right talent to fill specific roles on their boards.

How Are Audit Committees Monitoring and Addressing Emerging Issues and Risks?

Monitoring and addressing these emerging issues requires targeted strategies on the part of the board.

Janet said that she advocates for the use of the 1-2-3 method. In this framework, boards engage in three conversations:

  1. Management – First, speak with management to determine how the issues will impact the business and how the company is responding.
  2. Risk Management – Next, have a conversation with risk management to determine where new developments will fit on the risk register and whether they will alter current plans and projections.
  3. Board/Internal Audit – Determine where the emerging issue fits in the board agenda, what committee should be managing it, and how much time should be spent on it.

Michael emphasized the importance of having a risk register that is fit-for-purpose. Tailoring the process to the organization will ensure that you’re following up on the items that matter on a consistent basis.

“What’s paramount in all of this is identifying what risks are relevant, how you manage and mitigate them, and what residual risks exist that you might have to accept and work through as an organization,” he said.

Janet also highlighted the role of enterprise risk management (ERM) and internal audit in helping audit committees execute their mandates.

What Key Discussions Should Audit Committees and Management Be Having?

Audit committees and management should be having proactive conversations around what emerging risks will mean for their companies and what can be done to address them.

One of those conversations should be around investments. It is critical for audit committees to consider how much they are willing to spend to manage specific risks. For example, what should the company be spending on IT to combat cybersecurity risks?

Another conversation should be around people. Boards should be working proactively to ensure they have the talent in place to manage the forthcoming risks on the horizon. Companies operating globally, for example, should focus on hiring people who are equipped with the necessary expertise and context to tackle geopolitical issues in specific regions.

The audit committee and management should also be examining risks from a regulatory perspective. Changes in tax structures, global regulations, and reporting requirements from various international and local bodies will impact how companies respond to emerging issues. Michael noted that staying current on all forms of oversight can be daunting. However, it is incumbent upon members of the audit committee that they stay informed on regulatory standards that are relevant to their organization.

Managing Audit Committee Risks and Trends in 2025

As the panelists noted throughout the conversation, risk is a normal part of business. The goal of the audit committee is not to completely remove risks, but to ensure the right conversations are happening to manage them effectively.

“It’s not risk elimination; it’s risk management,” said John.

Aligning with management on the level of risk the company can tolerate will allow it to become more agile in the face of rapid changes.

Join us for our next WGOB Speaker Series event on January 30, 2025, Mastering the HRC: Understanding Best Practices, sponsored by Southlea Group. In this two-part webinar, we will delve into the key issues facing the HRC, leveraging Southlea Group’s Human Resources Committee and Executive Compensation Toolkits. Register now.