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E X E C U T I V E S U M M A R Y
T H E R I S K L A N D S C A P E
G R OWT H
T E C H N O L O G Y A N D I N N OVAT I O N
T H E R O L E O F G E N E R A L C O U N S E L
– Digitisation of operations has accelerated at a pace unthinkable at the start of 2020, with profound implications for risks related to operations and security – Although Brexit is no longer the primary focus it once was, General Counsel and Board Directors remain concerned about its operational impact on their business, but have become less concerned about long- term financial implications – Environmental risk remains near the bottom of the hierarchy of risk concerns. The prominence of climate change on the global business agenda does not translate into a concern about an immediate impact for most respondents. However it is important to recognise that environmental issues are increasingly recognised as touching on organisational, reputational, economic, competitive and regulatory factors
– The Board and General Counsel are becoming increasingly more aligned in their view of who is responsible for risk identification and management – Harnessing technology and creative management techniques
– For many, COVID-19 is an impetus for digital innovation. Many organisations have swiftly become adept at digital delivery and distribution and are beginning to appreciate the speed with which their organisations can move – Political risks are a concern, particularly China’s trading relationship with the rest of the world in the wake of the coronavirus, and the threat the situation poses to the viability of China’s manufacturing plants – Given the expected decline in globalisation, greater diversification in supply chains will be desirable and increased stockpiling of critical supplies is likely – General Counsel identify increasing regulation, including sanctions, as the biggest barrier to entering new markets. Board Directors place concerns about local compliance procedures, terrorism and political stability at the top of their list – A legal function that understands what the business wants to achieve and makes decisions in harmony with the Board can be a key engine for growth. This is possible if legal teams pro-actively identify problems and are not seen as simply firefighting – Risk assessments and decisions have to be aligned with the Board’s priorities and the Board should
– Market and economic risks are now the immediate top priority. Maintaining liquidity in the context of suddenly plummeting customer demand is the primary focus for most organisations – Political risk had been declining as a concern for Boards and General Counsel (GCs) because of the reduction in US-China trade tensions and Brexit uncertainty. However, COVID-19 raises new fears about the global trade relationship with China and highlights the need to re-evaluate supply chains and manufacturing strategies. The massive government intervention as a result of COVID-19 means that the economic role of government will be a key question over the next decade. Public scrutiny of business is likely to increase which may mean increased regulation, particularly in the areas of supply chain management and employee and public health – Organisational risk (talent management and managing change) has significantly risen in the hierarchy of concerns for both GCs and Boards even before COVID. Staff well-being and mental health has become an immediate priority. Employee engagement initiatives have increased alongside digital engagement
– COVID-19 has accelerated digital commerce and automation to an extent that all organisations are re-assessing their digital initiatives – Digital interaction has become essential in all operations forcing both organisations and individuals to adopt technologies at rapid speed – All organisations are thinking in terms of more investment in secure,
– COVID-19 has highlighted the need to have the correct balance of skills on the Board and between legal teams. It is essential to have the necessary strength in depth to withstand a crisis – Most General Counsel and Board Directors are positive about the agility and speed with which they have made and implemented decisions – Many feel that the stress-test provided by the pandemic has resulted in learnings about culture and purpose that can be extended beyond the timescale of the crisis – Boards are increasingly recognising the strategic contribution of GCs but there is a business-wide underestimation of the increasingly complex operational challenges facing senior leaders. It is likely that the COVID-19 crisis will increase recognition by the Board and across all functions that delivery of strategy is dependent on establishing an integrated and multifaceted operational structure
will be an important driver of improved reporting, cross- function communication and departmental integration
remote infrastructure to be in a better position for future crises
and to capitalise on the efficiencies and practical benefits that some organisations have discovered for the first time – Data security has become an even greater priority as a result of the move to remote workforces – The biggest perceived challenge to the effective harnessing of technology remains having access to the budget and skills to resource innovation projects, but the ability to respond to COVID-19 technology pressures quickly and effectively has increased confidence – General Counsel are at the forefront of conversations about digital ethics. Developing ethical rules and codes of conduct for data management will be a central responsibility of legal
departments, demanding greater understanding of the objectives, priorities and responsibilities of other corporate functions
always be included in these discussions and decisions
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