Under the stress of regulatory pressures, geopolitical uncertainty, cyber risks, fraud and economic crime — not to mention the glare of 24/7 public scrutiny — the risk of corporate crisis has grown. And with it, so has the role of the Chief Legal Officer.
Fortunately, the CLO, with its instinct for strategic thinking and a deep-seated sense of ethics, is uniquely suited to the task.
A crisis can shake an organization to its core, and shatter the trust it has built with its stakeholders, the public, and even society at large.
Many organizations are already familiar with the damage that a crisis can wreak on its operations and reputation: in a recent PwC survey, 65% of business leaders said they’d experienced at least one crisis in the last three years. 1 The list of potential adverse consequences is long: reputational harm, financial loss, fines and penalties, stock-price drops and litigation.
Invariably, in a crisis, issues of responsibilities, roles and processes are put to the test. We have observed that companies whose CLO or GC takes the reins in a major crisis — for example, a highly visible cyber-breach or a significant compliance breakdown — tend to have more successful outcomes. While the depth and breadth of the impact can be extraordinarily challenging, management of the crisis will be even more so.
Fortunately, this plays to the natural strengths of the CLO — and underscores why their role is more critical than ever. Senior legal professionals have the skills, training, temperament and strategic capabilities to lead their companies through the fire. And increasingly, they are being called to do so.
1 PwC’s CEO Pulse on Crisis. PwC, 2017 (found at: http://www.pwc.com/gx/en/ceo-agenda/pulse/crisis.html).
Crisis management can be broken down into four main components:
3. Legal and regulatory
Each of these components deeply impacts the others in dynamic, complex ways requiring a sophisticated, strategic approach to the resolution.
Nobody is better positioned to handle this challenge than the CLO or GC. This is why they can and should have a primary seat at the table across all four aspects of crisis management.