Board Governance in 2026: High-Performing Boards in Volatile Markets -Part 2

By Dr Sunil Kumar Mandal PhD, MBA

The governance landscape in 2026 has changed significantly from the previous year. Boards must now adapt to manage strategy, risk, and transformation amid ongoing disruption. They face challenges such as geopolitical tensions, digital transformation, ESG accountability, and increased stakeholder scrutiny. Although most boards prioritize these issues, governance practices and expertise remain uneven. For instance, 70% of Asian boards surveyed identified digital transformation as a top concern, yet many leaders report gaps in technology and ESG skills. Recent cyber incidents demonstrate that even well-resourced organizations remain vulnerable (Cybernews, 2025). These developments underscore the need for boards to move beyond compliance and adopt more proactive, strategic governance (Diligent Institute et al., 2025).

High-performing boards will move from monitoring to actively governing impact, embracing strategic challenges and building resilience as a competitive advantage. A practical approach includes a phased roadmap of diagnosis, redesign, and embedding new practices, supported by analytics, ESG dashboards, and scenario planning. This article uses global surveys and recent failures to outline how boards can enhance effectiveness and long-term value.

The Governance Problem: The Cost of Staying the Same

Boards face growing pressure to deliver strategic value, yet many remain structured to address outdated challenges, limiting their ability to adapt. Research shows that firms with adaptive governance and proactive oversight outperform peers in long-term shareholder returns, emphasizing the importance of modern governance (Jimmy M. Z., 2025).

Current Context

• Business models are evolving faster than most companies can adapt, placing greater pressure on boards to anticipate emerging trends and risks.

• Artificial intelligence is advancing faster than governance frameworks can adapt. Boards must address new risks and opportunities that traditional structures cannot manage effectively.

• Investors are directing more capital toward environmental, social, and governance (ESG) performance, increasing expectations for accountability and transparency.

• Regulatory bodies such as SEBI and their global counterparts are increasing requirements for board independence, risk oversight, and transparency. These changes add complexity to board governance.

Despite these pressures, many boards still devote most meetings to routine reporting rather than to strategic discussions or scenario planning. Surveys reveal that directors want greater focus on high-value topics but lack expertise in technology, cyber risk, and sustainability. Oversight tends to be compliance-driven, and issues such as culture and talent are often addressed only reactively (Russell Reynolds Associates, 2025; Deloitte, 2025).

This ongoing governance gap leads to strategy failures, reputational harm, increased regulatory scrutiny, and loss of value for shareholders and stakeholders.

What is missing?

Boards need new capabilities, better information flows, and a modern governance structure to succeed. By 2026, high-performing boards will not only monitor but also lead organizations through risk-aware and sustainable transformation. Real-World Lessons: When Governance Fails

India has experienced several high-profile governance failures in the past decade, offering important lessons for boards and leaders.

IL&FS Collapse: The 2018 collapse of Infrastructure Leasing & Financial Services (IL&FS) highlights serious failures in risk oversight. The board did not adequately scrutinise aggressive borrowing or the complex subsidiary structure, allowing short-term debt to fund long-term projects without sufficient challenge or transparency. This lack of oversight led to a severe liquidity crisis that affected India’s financial sector (Indian Express, 2018).

Yes Bank Crisis: Yes Bank’s near-collapse revealed significant shortcomings in its credit risk oversight. The board failed to challenge aggressive lending and weak risk controls, resulting in significant exposure to stressed entities such as IL&FS, DHFL, and Jet Airways. Lack of independence and weak internal checks further eroded asset quality, leading to regulatory intervention (Business Standard, 2020).

DHFL Governance Breakdown: Dewan Housing Finance Corporation Limited (DHFL) faced one of India’s most significant NBFC governance failures, marked by opaque related-party transactions and complacency among credit rating agencies. Auditors and rating agencies were criticized for failing to flag irregularities, while loans and exposures were concealed from effective board oversight. This case underscores the risks of weak governance and lack of transparency (Onceinabluemoon, 2025).

Café Coffee Day and Audit Failures: Recent enforcement action against Café Coffee Day Global Ltd. revealed serious lapses in audit procedures and oversight of related-party loans and guarantees. The National Financial Reporting Authority (NFRA) found that auditors missed key warning signs, leading to misstated financials and weak oversight of transactions (NFRA, 2024).

Satyam Scandal: The Satyam accounting fraud, often called India’s “Enron,” showed that even companies with established audit committees and reputable auditors can fail if boards do not challenge management dominance and ethical lapses. Chairman Ramalinga Raju’s admission of falsifying accounts, along with the board’s limited oversight, exposed a critical failure of governance and ethical accountability at the highest level (Wikipedia, 2025).

These failures show that governance is not just about forming committees, holding meetings, or producing lengthy reports. Effective governance requires the courage to ask difficult questions and the discipline to remain curious, especially when answers seem confident. Actual oversight depends on vigilance, independent thinking, and a willingness to challenge the status quo. Every board must cultivate and protect these qualities.

Actionable Takeaways for Boards in 2026 

Below is a practical Board Governance Performance Checklist. 

1. Reallocate time 

50% strategy: Develop a three-year growth roadmap with quarterly reviews to monitor progress and adapt to changes.

30% risk and resilience: Implement a comprehensive risk management framework to reduce potential threats by at least 25% annually. Introduce key performance indicators, such as the frequency of risk assessments and the percentage decrease in identified vulnerabilities. Conduct regular penetration testing and establish a rapid-response team to address emerging risks. Aim to reduce unaddressed critical risks by 10% each quarter.

20% performance and talent: Enhance talent retention and development, targeting a 20% improvement in workforce productivity and leadership capabilities. Measure progress using metrics such as employee retention rates, leadership pipeline growth, and internal promotions. Monitor employee engagement and training effectiveness to ensure continued workforce development. 

2. Deep-dive sessions

Hold quarterly sessions focused on technology, culture, and innovation. Begin each session with a scenario question to encourage deeper discussion. For example, in technology sessions, ask, "What would have to be true for our core product to be obsolete in five years?" In culture discussions, consider, "What would have to be true for our company culture to become a barrier to innovation?" For innovation, ask, "What would have to be true for a competitor to outpace our innovation capabilities?" 

3. Independent assurance

In addition to financials, treat ESG, cyber, and safety audits as opportunities for value creation rather than just compliance. Cyber reviews can reveal new digital revenue streams and enhance competitive advantage. ESG audits may identify sustainable practices that open new markets. Safety audits can promote continuous improvement, increasing operational efficiency and employee satisfaction. Linking each audit area to strategic opportunities encourages greater board engagement. 

4. Board capability matrix

Recruit expertise in digital, ESG, supply chain, and geopolitical areas. Conduct targeted board searches and consider external advisors for specialized knowledge. Invest in director training and upskilling to ensure effective governance across these critical areas. 

5. Transparent governance culture

Encourage dissent, curiosity, and scenario-based challenges. Establish clear norms for dissent to help directors engage confidently in robust discussions. Implement a concise challenge protocol, such as 'raise, explore, resolve,' to support constructive pushback without delaying decisions. If the boardroom is the smartest room in the company, something is wrong. The boardroom should be the most curious room in the company.

Closing Statement

Board governance is entering its most consequential decade in modern corporate history. Organizations that thrive will have boards that drive transformation, anticipate risk, and uphold trust as their most valuable asset. Imagine your 2026 board agenda beginning with an AI-generated risk dashboard that provides a real-time overview of current and emerging challenges. This technology enables dynamic decision-making and strategic agility. To integrate AI dashboards effectively, select a platform that fits your organization's needs and automate weekly risk reports to keep stakeholders informed. 

What is the single bold change your board will pilot this quarter? Share your response in one sentence below. 2026 is the time to redefine how governance creates value. How is your board preparing for this shift?

About the Author 

Dr. Sunil Kumar Mandal holds a PhD in Organic Chemistry, an MBA in Leadership & Strategy, and is an IICA-certified Independent Director. With 25+ years of leadership experience across science-driven industries, he focuses on enhancing board effectiveness through risk intelligence, ESG integration, and disciplined governance.

Connect to discuss board governance or ESG integration. Sharing experiences promotes peer learning and professional growth.

#BoardGovernance #BoardLeadership #CorporateGovernance #RiskOversight #ESGLeadership #DigitalTransformation #CyberRiskGovernance

References: 

Cybernews (2025). The biggest corporate security blunders of 2025. Available at: https://cybernews.com/security/the-biggest-corporate-security-blunders-of-2025/ (Accessed: 29 December 2025).

Diligent Institute, SID, and GIA (2025). APAC Governance Outlook 2026: Board priorities and digital transformation, 26 November. Available at: https://hrsea.economictimes.indiatimes.com/news/industry/survey-reveals-70-of-asian-boards-prioritize-digital-transformation-by-2026/125582407 (Accessed: 29 December 2025).

Jimmy M. Z. (2025) The leadership dividend: Why governance is a key feature of the next frontier of corporate strategy? LinkedIn, 30 October. Available at: https://www.linkedin.com/pulse/leadership-dividend-why-governance-key-feature-next-frontier-zadigue-9vy5c (Accessed: 29 December 2025).

Deloitte (2025) The future of board time and priorities. Deloitte. Available at: https://www.deloitte.com/us/en/programs/center-for-board-effectiveness/articles/future-of-board-time-and-priorities.html (Accessed: 29 December 2025). Deloitte

Russell Reynolds Associates (2025). The three areas boards spend their time but aren’t seeing results. Russell Reynolds Associates. Available at: https://www.russellreynolds.com/en/insights/reports-surveys/global-board-culture-and-director-behaviors-study/three-areas-where-boards-spend-their-time-but-dont-see-results (Accessed: 29 December 2025).

Indian Express (2018) IL&FS risk committee never met in the last two years, 3 October. Available at: https://indianexpress.com/article/business/ilfs-mess-got-deeper-but-its-top-risk-committee-never-met-in-last-two-years-5383682/ (Accessed: 30 December 2025).

Business Standard (2020) RBI cut Kapoor’s term at YES Bank on governance, compliance issues: Report, 30 November. Available at: https://www.business-standard.com/article/finance/rbi-cut-kapoor-s-term-at-yes-bank-on-governance-compliance-issues-report-118113000768_1.html(Accessed: 30 December 2025).

Onceinabluemoon (2025) DHFL scam: auditors and rating agencies. Available at: https://onceinabluemoon2021.in/2025/08/18/dhfl-scam-who-audited-and-rated-our-trust/ (Accessed: 30 December 2025).

NFRA (2024) NFRA fines BSR & Associates Rs 10 crore, debars two partners for Coffee Day Enterprises audit lapses, ETCFO, 20 August. Available at: https://cfo.economictimes.indiatimes.com/news/tax-legal-accounting/nfra-fines-bsr-associates-rs-10-crore-debars-two-partners-for-coffee-day-enterprises-audit-lapses/112644268 (Accessed: 30 December 2025).

Wikipedia (2025) Satyam scandal. Available at: https://en.wikipedia.org/wiki/Satyam_scandal (Accessed: 30 December 2025).