The multi-faceted nature of risk makes it a complex subject to manage. Formal structures and a pro-active approach can support both the handling of effective risk management and mitigation, as well as a crisis. The general counsel has an important part to play at all stages. Having an effective relationship with the business, as well as experience in areas such as M&A, health and safety, competition, compliance, regulatory and reputation management (to name but a few), can see the GC as ringmaster. However, wherever the GC is not seen as core to the organisation, they will be trying to defend the organisation from the sidelines.
To explore these issues, DAC Beachcroft has teamed up with The In-House Lawyer to canvass clients on the role and influence of the GC in the management and mitigation of risk – something which impacts all organisations, regardless of risk.
The aim of this survey is to establish the context in which GCs manage risk. Risks do not acknowledge internal boundaries nor indeed regular timing; but effective risk management requires that there is joined-up thinking across the organisation to bring everyone together to address material organisational issues. The role of the GC can be pivotal here, but it depends on the strength of the relationships they have throughout the organisation. For example, how connected is legal with risk, finance, marketing and indeed the chief executive? Does the GC act from a position of influence on the executive team and in liaison with the board; or is the legal department viewed as merely a support function to be called out when validation is required? Are the efforts of the GC to be proactive in risk management embraced or frustrated in early formation by the organisation’s attitude to the role of the GC and to risk itself?
Effective risk management requires joined-up thinking across the organisation to bring everyone together to address material organisational issues.
Ben Daniels, DAC Beachcroft
Often the GC also acts as company secretary. This of course may provide them with increased presence at crucial meetings and the ability to influence the direction of the organisation and its approach to risk management. However, boards see the role of company secretary in many different lights and their impact will depend on whether they are viewed as an administrator or a strategic adviser to the board. In addition, particularly in regulated sectors, the appointment of a chief risk officer may help or confuse what the GC/company secretary is trying to achieve. Indeed, does the tactical effort of compliance mean that there is no time to fulfil the potential of a more value-add service?
The results of the survey will be presented in IHL’s spring 2017 edition.