Risk management is a growing responsibility for legal departments and in-house counsel. While the responsibility to protect the company’s value and assets has always fallen of the shoulders of legal departments, the process of identifying, assessing and managing risk is increasing being done by General Counsel.
According to a NYSE Governance Services and Barker Gilmore study of US corporate directors and executives, the role of the GC “continues to evolve, with 14% currently acting as chief risk officer, a number that is expected to more than double to 31% by 2020.”
But that’s not all.
Due to their increased role in managing regulatory and compliance work, as well as reporting on strategic value, GCs are gaining more influence in the board room. With this influence, GCs are also taking much more of a managerial approach, helping each individual department manage their legal risks proactively. To this end, GCs needs to take time the time to communicate legal risk and how it affects the business.
A recent Legal Risk Benchmarking Report by Berwin Leighton Paisner, found that legal risk is poorly understood outside the in-house counsel. Furthermore, the same report found that GCs and the rest of the organization hold contrasting beliefs that legal risk information is being used to inform strategic decision making at board level.
While this paints a fairly negative picture of how legal risk is understood outside the in-house consel, it illustrates the need to find a systematic approach to identifying, assessing, managing and reporting on legal risk.
To improve understanding of the legal risks and strategic value across the entire business, GCs need to implement a risk management plan that provides an accurate assessment of all the legal risks.