There is a growing asymmetry between boards’ expanded responsibilities and the structural limits on their capacity. Over the past two decades, regulators have increasingly required boards to oversee compliance across a wide range of issues.

In response to the early-2000s accounting scandals, the Sarbanes–Oxley Act tasked boards with active oversight of financial reporting. After 9/11, regulators required bank directors to adopt and oversee their bank’s anti-money-laundering policies. The 2008 financial crisis brought on new mandates for bank boards to monitor capital adequacy on an ongoing basis. In the wake of the mid-2010s cyberattacks, financial regulators began insisting on board involvement in data security. Health regulators, following a series of Medicare fraud scandals, required hospital boards to formally approve credentialing criteria as a condition for participating in Medicare. Most recently, concerns about climate change have led international regulators to require that boards oversee and disclose their company’s climate-related risks and strategies.

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