Managing Risk – One of the Many Roles of a General Counsel
The role of a General Counsel in-house lawyer has always involved managing legal risks across the organization they advise, however, this traditional role seems to have evolved in recent years and seems to be no longer limited legal risks. In many cases, a General Counsel will be expected to be cognisant of and able to address, and sometimes even manage, all risks that span across their entire organisation; both internally and externally.
Risk Management
Within a businesses Risk Management Framework, there are generally understood to be the following elements:
- Risk identification – this is often referred to as ‘risk mapping’ but is simply a process whereby all of the possible risks facing the business are listed. These will include legal risk, but also IT, operational, strategic, regulatory and credit risk, for example.
- Risk Measurement – this element of the exercise involves assessing the quantum of each risk that has been identified and the probability of loss or the consequences of the risk materialising. Some risks will be easier to quantify than others and those more difficult risks may require subjective consideration and a collective view being reached within the organization.
- Risk Mitigation – this is where risks are considered through the lens of mitigating factors or possibly you may be able to eliminate a risk altogether (by choosing not to undertake the activity that creates the risk in the first place, for example, or purchasing insurance).
- Risk Reporting & Monitoring – it is important to agree a reporting and monitoring process within your organization that is proportionate and reflects the risks identified, but also the nature of the business.
- Risk Governance – ultimately, all companies should be ensuring that the management and oversight of the identified risks is allocated appropriately within the business and that a form of risk report is regularly produced within the business, reviewed by management and reported to the board of directors. This will involve assigning responsibility to individuals, committees and the board.
Key risk areas for General Counsel
- Governance and accountability
- Financial crime
- Cyber Risk
- Regulatory Risk – engagement with regulators and assessing the impact of changing regulation
- Operational and financial risk
- GDPR, privacy and data management risk
- Conduct risk
- ESG
