Dive Brief:
- Regulatory compliance has become the top risk area for general counsel, surpassing concerns about data protection even as digital risks remain prevalent, according to a report.
- Other leading risks cited by legal chiefs include data privacy, ESG and the implications of advanced technology, according to The 2024 General Counsel Report from FTI Consulting and Relativity.
- More than eight in 10 (82%) of surveyed GCs said their organization has some level of concern about the recent wave of generative AI, with data privacy, ethics and IP risk among the issues in play.
Dive Insight:
Three in ten surveyed general counsel listed regulatory compliance as their leading risk area, which was up from 23% a year ago. As a result, regulatory compliance led the way among identified risks for the first time in the five years of the report.
Overall, 92% of respondents put regulatory compliance among their top five risks amid a turbulent geopolitical environment. More than half (52%) mentioned “regulatory anxieties.”
“There is a lack of visibility on the regulatory landscape that is raising expectations for increased risks,” one GC said in the report.
For example, 40% of respondents said their company is following activity around renewed U.S. regulatory enforcement under “dormant” laws, with examples including the Clayton Act and the Robinson-Patman Act, two federal competition laws.
Additionally, 42% of global participants said that U.S. federal or state AI regulation is among the regulatory activity their organization is closely watching in the coming year.
Many of the GCs believe government scrutiny will continue to increase risks for their organizations.
“We are only beginning to scratch the surface of some of the risks,” another GC said in the report.
A growing number of GCs report experiencing new challenges with emerging data sources, with that figure rising from 45% of survey participants last year to 62% this year.
Along those lines, 93% report some level of concern about those data sources, which is up from 57% a year ago.
These data sources and off-channel communications can include collaboration tools, chat applications, file shares and other similar cloud-based systems.
Even as the risks grow, the report found that GC readiness for emerging data sources declined for a fourth consecutive year.
For example, 18% of legal chiefs report feeling unready and nearly half report they feel in a slightly better position of being minimally equipped. By comparison, last year 60% report they were at least meeting baseline preparedness.
“A lot of companies are trying to get their arms around emerging data sources and the technology is developing so quickly that it is hard to adequately gauge the potential impact to be sufficiently prepared,” one survey respondent said.
Overall, there was a consistent trend of declining resilience across every risk area measured in the report.
As for generative AI, half of the respondents said they are not prepared at all regarding the emerging technology and 43% reported being minimally prepared.
The FTI Consulting/Relativity report is based on a detailed survey and one-on-one interviews between Ari Kaplan of Ari Kaplan Advisors and chief legal officers at large corporations in every major region around the world. Kaplan interviewed 60 leaders serving as the general counsel or chief legal officer of their organizations in July and August 2023.
