Governance Quiz: Is Your Board Ready for the Rest of 2026?

If you thought 2025 was too tough to manage as a Canadian corporate director, then overseeing companies may not be your ideal calling. Either way, Canadian boardrooms clearly need to remain buckled up this year. After all, in just a matter of weeks, uncertainty has reached levels most of us have never managed before thanks largely to the disruptive force known as U.S. President Donald Trump.

As noted by former White House legal advisor Ty Cobb, U.S. political governance underwent a sea change last year, experiencing “a wholesale revision of the norms and guardrails that previously existed in America.” Nobody knows what exactly this means for the rest of 2026 and beyond, but with Trump rattling America’s sword along with his economic weapon of choice (tariffs) as he pursues the so-called “Donroe Doctrine,” the Canadian Armed Forces have started modelling responses to a U.S. military invasion for the first time in a century. Enough said.

The good news for Canadian directors is that nothing on the corporate governance front has to change if your board has been following best practices in risk management. The bad news is that risk oversight is often an outdated check-the-box exercise prepared by management. Keep in mind that good governance requires more than asking questions and reviewing information—it requires regularly updating the questions asked and information reviewed. By using the same questions and reviewing the same information year after year, boards can be lulled into a false sense of security instead of maintaining a forward-looking awareness of emerging issues and performance risks.

Want to know how your board would fare against an expert review? If so, take the 50-question quiz below, which will rate your governance of everything from trade diversification and artificial intelligence to ethical conduct, corporate performance, and CEO compensation.

Give yourself one point for every “yes” answer, and in less than 10 minutes, you will know how well your company is prepared for whatever 2026 has in store.

Good luck!

SECTION 1: Trade Diversification (Questions 1–5)

Question 1—Board Reporting: In 2025, did your company’s board of directors receive regular updates (each board meeting) from management on customer development, corridor routes, and new target markets for the company’s products?

Question 2—Canada Strong: Did your board get regular updates last year on international trade agreements, inter-provincial trade deregulation, and regulatory changes, and their impacts and opportunities for the company?

Question 3—Tariff Governance: Does your board require accelerated planning from management if your company’s goods (i) are tariffed; (ii) are targeted as “irritants” in the Canada–United States–Mexico Agreement (CUSMA) negotiations; or (iii) may be tariffed if the United States withdraws from CUSMA or declines to extend CUSMA for another term?

Question 4—Non-U.S. Trade Implementation: In 2025, did your board approve the integration of trade diversification, as part of the approval of (i) the strategic plan; (ii) the risk management profile; and (iii) executive compensation?

Question 5—Board Competency: Was your board’s competency matrix actioned and reconstituted in 2025 to include the following competencies: artificial intelligence; customer relations; government relations; international (non-U.S.); and regulatory (or the equivalents)?

SECTION 2: Artificial Intelligence (Questions 6–10)

Question 6—Competency and Training: Did AI competency, training review, and activities in 2025 include (i) AI as a competency was placed on the board matrix, with incumbent and prospective directors reviewed; (ii) bespoke training on AI was provided to directors and employees based upon the strategic plan and risk register; (iii) AI expertise of the assurance functions was reviewed; and (iv) talent engagement for AI transformation was reviewed, all with actioning as necessary?

Question 7—Opportunity, Productivity, and Efficiency: Did the strategic plan and budget approved by the board in 2025 include (i) written criteria for AI model inception, scaling, deployment, and results; (ii) AI key performance indicators (KPIs), KPIs affected by AI, and links to variable compensation; and (iii) written details on AI capital spending, budget allocations, returns, expenses, and savings?

Any score below 30 doesn’t just mean you failed the test—it means your company is at risk of a major governance failure.

Question 8—Risk and Controls: In 2025, did your board approve (i) AI as a material risk, with sub-risks that included compliance, data protection, disclosure, liability, model integrity, vendors, and workflow (or the equivalents); and (ii) an AI policy that included cyber security, financial and other reporting, intellectual property, privacy, procurement, and responsible usage (or the equivalents)?

Question 9—Assurance: Did the audit committee approve an internal audit work plan in 2025 that included (i) control testing over AI sub-risks in the risk register; (ii) compliance with a standard-setter or code, e.g., EU General-Purpose AI Code of Practice, ISO/IEC 42005, or NIST AI 700-2; (iii) reporting to the committee on AI control weaknesses; and (iv) management addressing AI control weaknesses, and reporting back to the committee and full board?

Question 10—AI, Fraud, and Cybersecurity: Was AI employed offensively in 2025 to deter, predict, or prevent harm to the company by (i) recognizing patterns, anomalies, and vulnerabilities; (ii) identifying code, cloud, malware, and model weaknesses; and (iii) enhancing encryption and penetration testing?

SECTION 3: Information and Reporting (Questions 11–15)

Question 11—Information: In 2025, did the board and each of its committees establish information flow from management that included the following criteria: accuracy, factual basis, format, forward-facing nature, frequency, quality, quantity, strategic nature, and timeliness?

Question 12—No Surprises: In 2025, was your board free of any issue related to management withholding material information or unduly influencing the board or any of its committees?

Question 13—Delegation of Authority: Did your board approve a written delegation of authority that clearly outlined to management what the thresholds were last year for committee review and board approval for executive actions, including actions related to the following: adverse events; bank signing authorities; bonus pools and payouts; budgeted and unbudgeted commitments; capital expenditures; compensation increases; equity awards; fraud; litigation; material non-compliance; one-time financial impacts; regulatory concerns; and reputation contagion?

Question 14—External Reporting: In 2025, was management’s external communications and reporting to auditors, investors, and regulators always transparent and accurate (and viewed by them this way at all times)?

Question 15—Independent Opinion: In 2025, was your board and all of its committees, along with the company’s legal department (or the equivalent), empowered in writing to be able to retain an independent opinion on any matter without management approval or interference?

SECTION 4: The CEO (Questions 16–20)

Question 16—Reporting: In 2025, was written reporting from your company’s CEO provided five days in advance of each board meeting and did it include goals, objectives, performance indicators, variances, and corrective actions?

Question 17—Evaluation: In 2025, did each director evaluate in writing CEO performance against performance-calibrated and weighted goals and objectives approved by the board at the beginning of the performance period?

Question 18—Variable Pay: Was CEO incentive compensation approved by the board last year based upon evaluation of performance and achievement of goals and objectives without any external peer benchmarking provided by an independent compensation consultant being unduly determinative?

Question 19—CEO Succession: In 2025, did your board approve candidates and written plans for emergency and permanent CEO succession, including tracking each top candidate’s progress towards CEO readiness?

Question 20—Concerns: In 2025, was your company free of material concerns related to CEO competency, commitment, and integrity, including any concerns expressed by individual directors during in-camera sessions?

SECTION 5: Performance (Questions 21–25)

Question 21—Strategic Plan: Did your board approve an annual written strategic plan for 2025, including the company’s values, vision, mission, and business model, along with weighted and calibrated KPIs for each stated goal and objective?

Question 22—Tariff Impact: Was diversification of your company’s sales and supply chain within Canada and internationally (non-U.S.) incorporated last year into the strategic plan, on a short-term and long term-basis, with qualitative and quantitative staged indicators to measure diversification linked to an appropriate portion of management’s variable pay?

Question 23—Board Strategic Insight: Did every director on the board last year have the required track record, experience, and credibility with management and investors to provide valuable insights, counsel, introductions, and advice related to modifying the strategic plan to diversify the company’s target markets?

Question 24—Monitoring Performance: During each 2025 board meeting, did management report in writing on progress made for each board-approved goal and objective in the strategic plan, covering any variances between expected and actual performance, while offering concrete plans to cure any reported deficiencies?

Question 25—Acting When Underperformance: Was your board capable of acting as needed if any company executive or director proved incapable or unwilling to pivot to a modified strategy last year?

SECTION 6—Compensation (Questions 26–30)

Question 26—Executive Compensation: Was variable incentive compensation in 2025 based upon the expected and actual achievement of goals and objectives within the strategic plan applicable to the individual(s) receiving it, and was variable short- and long-term compensation only awarded when warranted by performance?

Question 27—Risk-Adjusted Executive Compensation: Did variable compensation in 2025 get adjusted for risk and include a claw-back mechanism, a behavioural gateway, key risk indicators, payment deferral (until a risk review occurred), and board discretion with respect to tariff impact?

Question 28—Assurance Function Compensation: Did assurance functions (risk, compliance, internal audit, and actuary if applicable) receive variable compensation in 2025 based upon independence and assurance effectiveness, if applicable, and not on company results or financial returns?

Question 29—Director Compensation: Did board member compensation last year get reviewed by an independent compensation consultant and include share ownership, while being based upon the engagement, workload, and fulfillment of individual and collective roles and responsibilities, rather than company results?

Question 30—Shareholder Engagement: In 2025, did meetings without management occur between non-executive board members and major/longer-term investors to discuss publicly available information on potential tariff impacts on company governance, strategy, performance, and executive compensation, with appropriate actions taken following shareholder engagement?

SECTION 7: Risk Management (Questions 31–35)

Question 31—Risk Updates: Were company risk registers updated in 2025 to define material risks in each of the following categories: geopolitical, market changes, regulatory, supply chain, and technology (including artificial intelligence), or the equivalents as appropriate?

Question 32—Controls: In 2025, did management (i) track risk likelihood and impact analysis; (ii) track internal control effectiveness; and (iii) take further action, to address each material risk and report on the foregoing at each board meeting?

Question 33—Assurance: Did the internal audit workplan ensure last year that control testing was commensurate to emerging, high-priority, and strategic risks in the risk register, including those risks identified in Question 31?

Question 34—Reporting: Did your board review at each meeting in 2025 the adequacy of management’s action plans to mitigate top risks, including trade diversification to mitigate overreliance and tariff risk; reporting on consultation opinions of the Joint Review of CUSMA; and compliance with regulatory changes affecting the company, its suppliers, and its customers, and take action as appropriate?

Question 35—Black Swan: Is your board scheduled to review, in early to mid-2026, action plans for the imposition of tariffs on the company’s goods, and on key supplier and customer goods, arising from a six-month or sunset withdrawal by the United States from CUSMA?

SECTION 8: Financial Reporting (Questions 35–40)

Question 36—Audit Committee: Was each member of the audit committee assessed last year as being independent, financially literate, engaged, and effective, while the audit committee charter included risk management and had been independently reviewed in the last three years?

Question 37—Financial Reporting: Did governance consensus exist in 2025 on accounting policies and practices, controls over financial reporting, treatment of areas of greatest financial risk, material audit matters, and fair representation of financial disclosure?

Question 38—Independent Auditors: Were external auditors assessed in writing last year as being independent, effective, and resourced; possessing quality controls and unrestricted access; receiving full cooperation from management; and reporting functionally to and being compensated by the audit committee and board?

Question 39—Internal Audit: Was the internal audit function assessed in writing last year as being independent, effective, and resourced; possessing quality controls and unrestricted access; receiving full cooperation by management; and reporting functionally to and being compensated by the audit committee and board?

Question 40—Anti-Fraud: In 2025, did the audit committee and board act as appropriate to prevent manipulation of financial reporting based upon artificial intelligence; culture; earnings targets; exit interviews; reward structures; the adequacy of the internal control budget; the scrutiny of estimates and judgment; and the segregation of duties, and receive independent assurance that such controls were effective?

SECTION 9: Ethical Conduct (Questions 41–45)

Question 41—Public Scrutiny: Would all conduct-related matters within the company by its directors and employees in 2025 withstand public scrutiny?

Question 42—Background Checks: Did background checks and vetting occur for directors, executives, and other employees prior to their election or hiring in 2025?

Question 43—Ethical Conduct: Did company bylaws last year contain just cause and resolution triggers for directors and just cause and claw-back triggers for executive contracts in cases of ethical conduct?

Question 44—Whistleblowing: Did whistleblowing oversight reviews by the board and audit committee in 2025 include material complaints, remedies, system-wide cures, and a protected anonymous channel for complaints to by-pass management and directly reach the audit committee or board?

Question 45—Assurance: In 2025, did your board review the adequacy (along with the adequacy of related budgets) of legal and ethical compliance and internal controls, including those related to anti-fraud policies and expenses?

SECTION 10: The Board and Its Directors (Questions 46–50)

Question 46—Independence: Did director independence reviews in 2025 include affiliates, benefits, citizenship, domicile, employment, relationships, and tenure?

Question 47—Governance: Did the governance effectiveness review in 2025 include independent facilitation (internal or external) and performance cure implementation?

Question 48—In-Camera and Closed Sessions: Did an in-camera session of independent directors, and a closed session with each assurance function, occur at each board and committee meeting overseeing material risk in 2025?

Question 49—Leadership: Did director peer review results in 2025 find the board chair was one of the most effective directors (top two or three)?

Question 50—Directors: Was the independence, competency, and performance of each board member reviewed last year against updated categorical standards of independence, an updated competency matrix, and peer assessment (or the equivalent), with board renewal or director re-appointments occurring based on the results?

QUIZ RESULTS

• If you scored 40 or more out of 50, you deserve congratulations for getting an “A” on this governance quiz. Keep up the good work!
• If you scored 35 to 39, you are in the “B” range. You have work to do.
• If you scored 30 to 34, you get a “C” and your governance likely has material deficiencies.

Any score below 30 doesn’t just mean you failed the test—it means your company is at risk of a major governance failure.