Clyde & Co is pleased to present Section 1 of the Looking Glass Report 2020, in collaboration with professional member network Winmark. The annual Looking Glass Report investigates trends and developments that impact senior legal leaders, both in-house and in private practice. Section 1 considers the Risk Landscape – and later sections look at Growth, Technology and Innovation, and the Role of the GC in turn.

Our research has traced how GC and Board perceptions of the risk landscape have been changing as the COVID-19 crisis has evolved and addresses how this will impact their future strategies and actions. 

The key components that have shaped the risk landscape in recent years have not changed. However, they are now viewed through the lens of an epidemic that has fundamentally altered our assumptions.

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COVID-19 transforming the risk landscape

COVID-19 has turned what was already a challenging risk environment into a short-term crisis management situation without precedent. The rules governing how General Counsel and their legal teams tackle the risks presented by globalisation, complex and digitised supply chains, AI and automation are being re-written at pace.

In the short-term legal teams are focused on analysing contracts, reviewing force majeure clauses, and termination and suspension rights. They are also focused on the short-term impacts of production interruptions and disrupted supply chains, with one eye looking ahead to what implications the current experiences will have for future risk management.

Longer-term, it is abundantly clear from our conversations with General Counsel and Board Directors that many of the risks that were expected to have an impact over the next five to ten years have been abruptly brought into sharp focus.

COVID-19 is top of every agenda and I bet that very few businesses had this in their risk analysis. The biggest risk to the business is something you haven't thought of.

General Counsel, Financial Services

Market and Economic risk: Dealing with the existential threats of maintaining liquidity and access to cash in the context of suddenly plummeting customer demand is the primary focus for most organisations. 

Technological risk: Digitisation of operations has accelerated at a pace unthinkable to most organisations at the start of 2020, with profound implications for operations, security, business accommodation and customer delivery and distribution. 

Over a relatively short period of time we've gone from 300 people enabled for remote working to more than 2000 including call centre staff being able to do their jobs from home.

Paul Donovan, NED, Thames Water

Organisational risk: Staff well-being and mental health has become a short-term priority and has highlighted practices that may well prove to be beneficial in the long-term as remote working becomes  more common. Employee engagement initiatives have accelerated at pace alongside digital engagement. Team management and managing change had already moved up the hierarchy of concerns prior to COVID-19 as attraction, development and retention of skilled teams had become an increasingly pressing challenge, exacerbated by the need to develop skill resources to deliver digitalisation and defend against data privacy and cybersecurity threats. The crisis has also revealed shortcomings in succession plans as leaders have become sick and replacements have been required across all departments.

Awareness of mental wellbeing has been central to our approach and we've worked with a clinical psychologist looking at building resilience. This focus on soft skills, mental wellbeing and communication has helped us as a legal function to cope with the recent sudden changes. We have also organised exchanges to match resource supply and demand across the group and its locations.

Oliver Canning, Chief Legal Counsel, NBCU International 

Political risk:  COVID-19 has caused government intervention on a scale that hasn't been seen for decades. How much, how fast, and in what ways governments reduce their economic role will be one of the most important questions of the next decade. Last year, Brexit and the US-China trade war caused concerns about political risk to spike to the highest levels in the study's history. The global trade relationship with China is now more uncertain than ever and organisations are rapidly re-evaluating their supply chains and manufacturing strategies. 

With most businesses likely to be operating to some extent with public money, government scrutiny of business is likely to increase. This could mean increased regulation, particularly in the areas of supply chain management and employee and public health.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.