Digital & Technology

Digital NEDs Deserve A Place On Your Board

4 min read

During such uncertain times, appointing a digital subject matter expert at board level should be on the agenda.

Cyber attacks are no longer rare events, but a constant threat. Recent breaches at major brands like Harrods, M&S, Co-op, and Jaguar Land Rover have underscored the growing scale and impact of these incidents and how quickly they can escalate.

The cyber attack suffered by telecoms company Optus, represented Australia's largest data breach, affecting 40% of the population and leading to the CEO’s resignation. It triggered national policy reform and highlighted systemic risks in critical infrastructure and data governance. The incident underscored that cyber risk is a board-level responsibility, not just an IT issue.

From Threat To Strategy

These and similar attacks pose existential risks to organisations, often resulting in severe financial and operational damage. As a result, boards are asking urgent questions: Are we actually prepared? Do we have the right cyber strategy and resilience in place? How would we respond if we were targeted?

It's not a matter of if, but when - and when that moment arrives, the challenge becomes: How do we protect our business and customers whilst maintaining momentum? This was also highlighted in a recent ministerial letter to UK Chairs and CEOs, emphasising why cyber security should be a board responsibility.

With cyber and AI at the top of the strategic risk register, appointing a Digital NED to the board should be a priority, bringing essential expertise to lead discussions on technology, digital transformation and data strategy.

In 2023, the U.S. Securities and Exchange Commission adopted rules whereby public companies are required to disclose cybersecurity incidents, as well as annually report information as to their cybersecurity risk management, strategy and governance.

In the last 12 months, 52% of all new UK board appointments in financial services firms have technology expertise, representing a 36% increase from the previous year, underscoring the growing reliance on digital leadership.

What We Are Seeing

Odgers recently conducted market research into the current Digital NEDs in the FTSE 100 and 250 companies and found:

There are 51 Digital NEDs in the FTSE 100, but only 23 in the FTSE 250.
56% of the Digital NEDs in the FTSE 100 are still in executive careers, whereas in the FTSE 250, this is much greater at 73%.
The majority of Digital NEDs in both the FTSE 100 and 250 have a functional technology background at 60% and 65% respectively.

This is confirmed in the UK and beyond the FTSE 100 and 250, as numerous technology leaders and industry experts from regions like the U.S., Middle East, Europe, and Asia also hold board positions in international companies.

While some boards have moved quickly to appoint one or more Digital NEDs to lead on technology and digital matters, others have opted to rely on internal roles such as the CIO, CTO, or CDO to provide advice. Boards may also turn to Technology Advisory Boards and external consultants for guidance.

However, there is a growing and clear message, particularly from the finance and banking sectors, calling for stronger board-level representation on technology. This highlights both the opportunity to strengthen strategic oversight and the risk of vulnerability if boards fail to act.

A Digital NEDs’ primary role will always be as a NED where they might sit on Remuneration, Audit and/or Nomination Committees, contributing to the board in the same way as other members. Their secondary role, however, is to bring knowledge of IT, digital, data, AI and transformation to the table which, for too long, has been absent from a world evolving so rapidly due to the influence of technology. Some forward thinking boards have already created Technology sub-committees on their main board to reflect this new dynamic

Digital NEDs Delivering For The Future

AI continues to be a prominent topic of discussion at board level as to how best to leverage the technology. This focus often centres around enhancing customer experience and achieving greater efficiency across internal systems.

At a deeper strategic level, this can involve decisions around investing in AI tools that strengthen customer relationships and deliver more value. It also involves streamlining operations by automating tasks and reducing manual staffing through robotics and intelligent systems.

The rising need for Digital NEDs is closely tied to the scale and complexity of transformation initiatives, particularly cloud migration. Organisations undertaking such journeys recognise that transformation is not just technical, but cultural and strategic.

Boards need guidance on critical issues such as vendor selection, supply chain security, and organisational change, and a Digital NED can help support with this oversight.

Beyond current transformation efforts, boards must also look ahead. Horizon scanning - identifying emerging technologies and anticipating disruption - is essential to shaping future strategy. To do this effectively, boards should appoint Digital NEDs who are not only current in their knowledge but actively engaged in the technology sector, either as sitting executives or functional leaders. This ensures they bring real-world insight into today’s market dynamics.

For over 25 years, Odgers’ CIO & Technology Officers Practice has, in partnership with our Board Practice, helped organisations of all sizes identify outstanding Digital NEDs, made possible by our expertise and extensive global talent network, spanning industries and geographies. Contact our teams if you have an interest in learning more about this growing trend.

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Get in touch. Follow the links below to learn more, or connect directly with our dedicated executive search experts and Digital & Technology Officer leadership consultants at your local Odgers office here.