Close to the halfway mark of 2025 and, already, we’ve seen a growing global trade war, rise in AI-based cyberattacks, wildfires in Los Angeles and the most powerful earthquake to hit Myanmar since 1912, with the cost of climate disasters estimated to reach $145 billion this year alone, rising civil unrest and inequality, and more disruptions on the horizon.

These trends are not happening in isolation; in 2023, the World Economic Forum described our current reality as a ‘polycrisis’—a cluster of multiple simultaneous and linked catastrophes, with their overall impact exceeding the sum of each part. Each trend compounds and exacerbates others, creating a volatile operating environment.

As businesses navigate an era marked by rising geopolitical instability and climate and biodiversity breakdown that is felt the world over, the concept of ‘future-fitness’ has never been more paramount. This polycrisis requires entrepreneurship, innovation and adaptation at an astounding pace and scale. Businesses are good at all three, and boards play a critical role in steering their organisations through this complexity, ensuring resilience and long-term success.

According to the UK Institute of Directors, a board’s key purpose is “to ensure the company’s prosperity by collectively directing the company’s affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders.”

Consequently, some boards are increasingly recognising the imperative to evolve in this polycrisis, and that traditional approaches to risk management are insufficient; transformational, over incremental tick-box strategies, are necessary for creating the breakthrough needed. But what does this look like in practice?

Integrating hard and soft governance

From Forum for the Future’s research on governance, we have identified three ‘hard’ and three ‘soft’ governance levers for future-proofing governance. Hard governance refers to visible or tangible structures and social processes that companies use to shape their operations, such as business structure, strategy, operating procedures and practices. In contrast, soft governance is its less tangible counterpart, used to create and shape a company’s activities. Examples include leadership, culture and informal decision-making.

How we relate, work together and organise ourselves is key to change, making governance an area of untapped potential for enabling transformation. The power of soft governance is often also overlooked within a business because it is less visible. However, these elements are also levers of change that can drive transformation, adaptation and value creation. Both hard and soft governance levers are interdependent and interconnected, and approaching them with this in mind creates a powerful tool for value creation in a volatile decade.

Hard governance levers

1. Strategic foresight and adaptability Boards must adopt a forward-looking approach, integrating sustainability and resilience into the core business strategy. This involves scenario planning, understanding potential disruptions, and being prepared to pivot as circumstances change. For instance, anticipating regulatory shifts or technological advancements can position a company ahead of competitors.

2. Organisational structure and accountability A clear governance structure with defined roles and responsibilities ensures efficient decision-making. Boards should establish committees focused on sustainability, risk, and innovation to address specific challenges proactively. Regular reviews and audits can help in assessing the effectiveness of these structures.

3. Formal processes and risk management practices Implementing robust risk management frameworks is essential. Boards should ensure that processes are in place to identify, assess, and mitigate business risks—recognising that what have been traditionally considered as separate environmental and social risks are by their nature, interconnected. Regular training and updates on emerging risks can keep the board informed and prepared.

Soft governance levers

1. Purpose-driven leadership Leaders should embody and promote a clear organisational purpose that aligns with societal and environmental well-being. This purpose serves as a guiding star, influencing decisions and strategies across the organisation. Boards play a role in defining and reinforcing this purpose at every level.

2. Organisational culture and values A business that encourages a culture of transparency, diversity, inclusivity, and continuous learning fosters resilience and greater levels of value creation, which we explored in the case studies in our Business Transformation Compass 2.0 Guide published in March 2025. Boards should champion initiatives that promote these values, such as JPMorgan Chase’s neurodiversity programme which has unlocked significant value for the company, opening communication channels, and employee development opportunities.

3. Informal decision-making and innovation Encouraging informal networks and cross-functional collaboration can lead to innovative solutions. Boards should support environments where employees feel empowered to share ideas and challenge the status quo, leading to agile and responsive decision-making.

The board’s imperative

Future-fitness requires a balance between structural mechanisms and cultural dynamics. For example, while formal risk assessments (a hard lever) are crucial, they are most effective when complemented by a culture that encourages reporting and open discussion of potential issues (a soft lever).

With extensive new generational challenges ranging from geopolitical shifts, environmental crises, a changing social compact, to digitisation and AI, the role of board directors has become ever more complex. In an increasingly volatile operating context, boards have a responsibility to steer their organisations toward value creation that is beneficial to business, and effective boards can go deeper to create a significant, positive societal and environmental impact.

Cognisant of this potential, some companies have appointed specific issues to their boards of directors. For example, Faith in Nature and House of Hackney, a natural beauty and lifestyle brand respectively, have both appointed ‘nature’ to their boards of directors. In practice, this means that both companies have created a seat at the boardroom table, where an appointed individual has the responsibility of formally representing nature’s interests within the business. While this governance innovation is not attributed as direct cause, reports suggest that Faith in Nature’s market share has grown in recent years.

By strengthening and leveraging both hard and soft governance levers, boards can ensure their businesses are more effectively prepared for the future and better enable value creation. And critically, doing this contributes to tackling the current polycrisis to create an operating environment in which business, society and nature can collectively thrive.

James Payne is director, purpose of business, and Gemma Bridgman is principal sustainability strategist, both at Forum for the Future