Legal risk is firmly under the spotlight. Companies, their boards and General Counsels (GCs) face a challenging business environment with exposure to financial and reputational losses if legal risks develop.
In late 2018, Deloitte Legal surveyed general counsel and senior in-house lawyers across a large number of businesses in multiple sectors' companies across Europe, North America, and Asia-Pacific to compare and contrast their relative maturity levels towards risk.
This point of view considers what constitutes a legal risk, how it should be approached and managed, and by who. It examines the steps being taken in getting to grips with legal risk management and sets out our view of what the future holds in relation to the management of legal risk.
The results reinforce our view that as the Legal function transforms so does the way in which it contributes to the organization’s risk management. There is an expectation that in-house Legal teams will do more to identify, manage and mitigate legal risks. In the financial services sector, there is an increased regulatory interest, particularly looking at how Legal fits into the wider organizational risk framework. These pressures are causing organizations to identify and manage the overlaps and gaps between Legal and the other parts of the business more effectively.
As organizations become increasingly mature in their identification and management of legal risk, we can expect to see legal risks separately identified and included in an enterprise’s Risk Management Framework. This change of approach will enable Legal to respond more effectively to increased expectations and contribute to competitive advantage by controlling legal risks arising across the organization’s operations.