The latest Director Sentiment Index (DSI) reached 12.7 in the first half of 2018, up from 11.8 points from the previous survey. While optimism is on the rise, directors are concerned about issues such as sustainability and long-term growth prospects, changing business models and corporate culture. Business reputation in the community, data security and cybercrime are also pertinent.
Global directors predict that big data, transparency, automation and Artificial Intelligence will have the most positive impact on their organisation in the next five years. Data security recorded a significant increase in the question of what keeps directors awake at night, even with the survey being conducted before the revelations around Cambridge Analytica and Facebook became public.
Sentiment around the health of the Asian economy is more optimistic in the first half of 2018. 63% of directors perceive the Asian economy as currently strong, and 61% expect it to remain strong over the next 12 months. Directors are significantly less pessimistic about the health of the European economy compared to the second half of 2017; however, 41% of directors perceive the economy as weak at present. The sentiment for the US economy is also increasingly optimistic, despite recent uncertainties in trade and economic policy, with 44% of directors perceiving it as presently strong, and 45% expecting it to remain strong over the coming year.
Directors are also optimistic about the Australian economy, with 34% expecting it to be strong in the next 12 months. Infrastructure continues to be a top long-term priority for directors in Australia, followed by issues associated with the ageing population, climate change and tax reform. 72% of directors perceive there to be a risk-averse decision-making culture on Australian boards, a figure attributed to excessive focus on compliance over performance and pressure from shareholders for short-term returns.
The Director Sentiment Index results are a representation of the AICD membership. The survey was conducted with 945 members between 8 March and 20 March 2018.