Through the looking glass | KPMG | BE

Through the looking glass: General Counsel Report 2016

Through the looking glass

The general counsel (GC) occupies a unique role on the fulcrum of risk and opportunity of a business. He or she must protect the brand and, at the same time, help to enhance its value. In order to obtain a fresh perspective on this ever-changing, demanding position, we talked to other corporate leaders about the GC’s role: the messages provide compelling food for thought, and underpin a five-point road map that the GC’s need to cover.

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A total of 34 business leaders (including board members, chief executive officers, chairmen, non-executive directors and chairmen of audit committees) from around the world were interviewed with regards to the role of the GC. Since this is the first time corporate leaders from outside the legal function are interviewed, this marks a 180 degree change in perspective.

There has always been tension in the role of the GC between protector and enabler of value. But, as the GC ventures further into the realm of business, it will become harder to maintain this balance while meeting the expectations of the board. The challenge is a matter of degree, requiring GCs to become ever more comfortable with the technical details relevant to their business and industry, as they take on positions of increasing influence, necessitating broad, incisive decision-making.

Given the requirement to concentrate on key details in an increasingly complex business environment, we asked the business leaders to rank the top five risks on which the GC needs to focus: unsurprisingly, regulation is top, but technology-related risks came second, with interviewees pinpointing cyber-related risks and citing technology-related risks more broadly. The threat of cyber-attack has been lurking for a number of years, but is now seen as greater than both litigation and contract risk. Furthermore, the interviewees provided the following three core messages:

 

  1. The key value that GCs add to the business and the board, is their holistic overview of the company, encompassing everything from ground operations to overarching strategic planning.
  2. The most important future trend which GCs must be on top of is the continuing development of technology. The risks and opportunities are huge, and are inseparable from the risks and opportunities of the business itself. 
  3. The key growth area is communication across the business. This covers all communications, including presentations to the board and shareholders, press conferences, and internal meetings with the in-house legal team and other colleagues.

 

Based on the interviews with Chief Executive Officers, board directors and others, we have developed a road map for the new paradigm, which encompasses five main attributes that describe today’s best GCs:

  • Risk manager: The GC should constantly be alert to and vigilant against an increasingly broad array of global threats to the company, and handling them accordingly. Besides, with their knowledge of the law, GCs are uniquely placed to interpret risk as a business opportunity.
  • Technology champion: Technology is surely the GC’s greatest enabler and biggest challenge. They need to understand what the technology does, what it can do, and the associated risks. Simply put, the GC must be on top of technology issues, to remain on top of business trends.
  • Key communicator: All corporate leaders are required to excel at communicating, especially in times of crisis, such as a serious allegation of corporate misconduct or the discovery of the theft of a large sum of money. GCs are no exception; they need to adeptly handle communications with key stakeholders such as the board and investors, as well as effectively communicate with regulators and internal teams.
  • Builder of corporate culture: As the keeper of the corporate conscience, the chief legal officer must help to create a work environment in which employees are encouraged to be aware of risks and not merely avoid them. The GC should set a tone of trust at the top and building a risk-aware culture in which compliance is not seen as a straitjacket, but as a source of competitive advantage. 
  • Business leader: Providing insightful commercial advice to the other senior executives and the board, based on sound legal principles.

 

If GCs feel they have the road map covered, the technology mastered and communication down to a fine art, then our research suggests that business leaders believe they are excelling. They are an exemplar of their hugely challenging, but unique, corporate position at the fulcrum of risk and opportunity.

Return to the Risk + Newsletter March 2017

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