Section 1 – The risk landscape
G E N E R A L C O U N S E L A N D B O A R D W H O A G R E E O R D I S A G R E E W I T H S T A T E M E N T S
T H E R I S K L A N D S C A P E I S
At the start of the crisis we asked Boards and General Counsel about their organisation’s preparedness to respond to high impact risk events. While the aggregate figures were similar, there were noticeable divergences, such as on technological and organisational risks where Board Directors were more positive about their preparedness, especially around technology where despite ranking it as a top two concern, all the Board respondents felt their organisations were prepared for technology risks. Under the pressure-test conditions of the COVID-19 crisis, it would appear that Board Directors may have had a more accurate view of the position. All the feedback we have received from General Counsel has expressed how impressed they have been with their organisation’s ability to respond and adapt quickly. While it is not a top risk concern for either audience, both feel relatively unprepared to deal with environmental risks, suggesting once more that this is an emerging threat that, while of less immediate concern is at least a known omission, but perhaps not for long. The areas of divergence have been largely consistent year on year. A silver lining of the current crisis may be that Boards and General Counsel will be forced to discuss attitudes around legal risk in order to find greater understanding and alignment. Overall, it is striking how aligned Board and General Counsel perspectives are, challenging the characterisation of the legal function as being particularly risk averse.
B E C OM I N G MO R E C OM P L E X AT A N AC C E L E R AT I N G R AT E Even prior to COVID-19, given uncertainty over the influence of China, changing societal values around work, political and market pressures to respond to environmental concerns, data and cyber risks, the technology skills gap, the increasingly data driven nature of organisations and ever-increasing connectivity and mobility, it was no surprise that most respondents perceived an increase in risk, and also perceived that the pace of change is accelerating faster over time. Prior to the crisis legal functions
I ’ M I MP R E S S ED WI TH EVE RYONE ’ S AB I L I TY TO CHANGE P ROCE S S E S AT H I GH S P E ED. WH I L E WE HAD DEVE LOP ED AN AG I L E AP P ROACH I N SOME AR EAS OF OUR BUS I NE S S TH I S WORK - F ROM- HOME P E R I OD HAS E L EVAT ED US TO A D I F F E R ENT L EVE L .
80 % 2%
88 % 6%
The risk landscape is more complex than 2-3 years ago
51 % 13 %
59 % 6%
The pace of change in the risk landscape is accelerating rapidly
Oliver Canning, Chief Legal Counsel, NBCU International
also experienced a particularly demanding period of new and
increasing regulatory requirements, including both regional legislation (such as GDPR) and additional sector specific regulation. COVID-19 has only accelerated those concerns. Preparing for an increasingly challenging risk landscape is a priority for both Boards and General Counsel alike. The boundaries between legal, reputational and regulatory risk have continued to become less clear, so integrating and aligning activities of separate departments (such as corporate affairs, risk and compliance) is more necessary than ever. It is an encouraging step in achieving this alignment that General Counsel and Board Directors largely agree about the risk priorities they face and the extent to which competitive pressures are increasing the appetite for risk.
49 % 11 %
41 % 12 %
COMP L EX I TY COME S F ROM THE SHE E R VOLUME OF I NFORMAT I ON. I F TRUMP TWE E T S , WE HAVE TO R EACT TO THAT. WE HAVE TO ACC L I MAT I S E TO H I GH VOLUME S OF I NFORMAT I ON WH I CH NOW I NC LUDE I NTU I T I VE AND P E R SONAL V I EWS DUE TO THE P LAT FORMS AVA I LAB L E .
Risks have increased significantly in the last 2-3 years
39 % 22 %
35 % 24 %
Competitive pressures are increasing the willingness of organisations to take on risk
18 % 29 %
29 % 34 %
It is harder to identify risks than 2-3 years ago
Ronald Cheung, Legal and Risk Management, Fung Group
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