General counsel are required to know something about every business in their corporation and mitigate risks. As a result, they are in many ways at the center of the company. In Nigel Holloway’s January article “General Counsel on Their Issues for 2012”, Holloway discusses the critical issues facing GCs for the coming year. In a joint research effort between Corporate Counsel and ALM Legal Intelligence, Holloway examined the responses of 107 GCs and their deputies at U.S. corporations in a recent survey.
The responses were intriguing. One question asked about their fears and the biggest corporate risks they envision in 2012. Of 8 possible responses, 51% chose an event or a change in business conditions that specifically affects their firm or industry. 11% and 4%, respectively, chose risks such as a collapse of the U.S. dollar or a breakup of the Eurozone, even though the survey was administered in the midst of Greece’s economic plight late last year.
Holloway goes on to note that follow-up interviews revealed fear of the unknown as a central theme. Said one GC of a Myrtle Beach-based electronics manufacturer: “One of those things that you worry about is: What don’t I know? I worry less about things that I know.” Yet surprisingly given the apparent anxiety, Holloway pointed out that 47% reported they had not updated their crisis-management plan for the year, compared with only 36% who had. 17% percent said they were unsure if they had a crisis management plan.
Some of this, Holloway maintains, is due to the fact that GCs and executives are often overly optimistic about their own business prospects, and also because many feel their crisis-management plans need not change if management stays the same. But with the growing threat social media outlets pose to a company’s reputation, GCs and their execs should be advised to update them regularly.
The survey also asked questions about data security and the global supply chain. Overall, it seems these were not significant concerns for many GCs. Of those that had foreign operations, 61% said their antibribery program was relatively strong. When looking at data security, 49% said they were “reasonably certain” their company’s procedures would prevent “hacking and other data leaks”. 19% either indicated concern over hacking or didn’t know what preventative procedures were currently in place.
Another problem cited by GCs is that they are often perceived by business leaders as reactive. 53% felt they were brought in too late to deal with matters effectively, and 28% admitted they felt perceived by company execs as roadblocks rather than facilitators. To combat this, a majority of the respondents said they would hold more frequent meetings next year with the heads of business units, and almost a quarter said the relationships that most need improving in 2012 are with the CFO, CEO and the board. Holloway concluded by saying the biggest problem reported by GCs (61%) relates to regulatory and the increasing number and complexity of regulations. Closely behind at 53%, GCs cited the pressure to do more with fewer resources.