According to a recent global survey sponsored by FTI Consulting, Inc., less than 50 percent of general counsel checked for new and emerging risks with advanced technologies such as third-party risk intelligence, predictive analytics, scenario modelling, and artificial intelligence-enabled monitoring.
“Steady Advisers for an Unsteady Age: Realising the Full Potential of the General Counsel in a Polycrisis” – the second edition of an independent report produced by Economist Enterprise – aimed to shed light on the GC role in the context of the current “polycrisis,” where threats are:
- overlapping more and more
- aggravating each other
- causing various impacts throughout different areas of businesses
In a press release, FTI Consulting shared that organizations are increasingly tasking GCs with finding emerging threats, developing the organization’s response, and examining the legal, regulatory, and reputational ramifications.
“When the stakes are high and the facts are still emerging, the GC is often one of the first people that leaders turn to and one of the few expected to answer the most difficult questions,” said Jean-Werner de T’Serclaes, FTI Consulting’s co-chair for Europe, the Middle East, and Africa (EMEA). “That is why GCs need a seat at the table, working alongside management and the board to assess risks and make informed decisions when it matters most.”
Crisis response and management
Of the organizations surveyed, almost 70 percent had a written crisis plan, but only 17 percent took a proactive approach, subject to continuous testing, to pinpoint and to tackle emerging risks before their escalation into full-scale crises.
“A written plan matters, but real preparedness means recognizing the signals early, bringing the right experts together, determining what is really happening across multiple layers of an organization and making difficult decisions while there is still time to shape the outcome,” said Steven H. Gunby, FTI Consulting’s chairman and chief executive officer. “General counsel are increasingly central to that effort.”
Among poll participants, over 80 percent waited until risks had escalated before seeking external crisis support. FTI Consulting explained that responding too late could:
- waste time
- limit access to the assistance needed to deal with the crisis
- increase legal, regulatory, and financial exposure
“The successful management of crises rarely sits neatly within one part of a company or one jurisdiction,” Gunby said in the press release. “They cut across legal, regulatory, operational and reputational considerations, often before leaders have all the facts.”
According to FTI Consulting, receiving timely and thorough information could help organizations respond more swiftly to risks.
The research revealed that 61 percent of organizations with a proactive crisis management approach utilized AI-enabled monitoring of external signals, compared with 46 percent of all organizations surveyed.
Consequences of false alarms
While organizations might need to address emerging threats before they have all the available facts laid out before them, FTI Consulting acknowledged that false alarms could divert resources, among other potential drawbacks.
Of GCs participating:
- 40 percent claimed that false alarms made subsequent warnings less credible
- 42 percent hesitated to escalate serious issues due to their worries about overreacting or losing credibility
- 57 percent communicated early with their boards to frame the issue and weigh the available options and trade-offs before setting positions
- 27 percent said their budget allotted for crisis spending remained safe, while others reported budget cuts
“Preparedness budgets need to be spent smartly, particularly when resources are constrained,” Jean-Werner de T’Serclaes said. “It is about making sure the capabilities needed to handle a crisis are there when it hits, particularly when enterprise value, reputation and stakeholder trust are on the line.”
More on general counsel survey
Economist Enterprise conducted the survey, sponsored by FTI Consulting, through online means and via telephone from March to April this year.
The report considered insights from general counsel and equivalent primary legal decision-makers who were directly involved in risk management decisions and primarily responsible for legal decisions. The 1,100 participants included:
- 200 in North America
- 600 in EMEA
- 300 in the Asia-Pacific region
All respondents were at organizations with annual revenues of over US$1 billion, apart from those in Saudi Arabia, where the minimum was US$500 million.
In its press release, FTI Consulting noted that this year’s survey sought to build on research in 2024 regarding the shifting strategic role of general counsel within crisis management.
More news regarding in-house lawyers
According to a report recently published by Everlaw and Wakefield Research, corporate law departments were increasingly adopting generative artificial intelligence, with corresponding implications for outsourcing needs and cost savings.
In February, FTI Consulting and Relativity released the results of the seventh annual edition of “The General Counsel Report,” which highlighted that legal leaders were facing more complexity, unpredictability, regulatory activity, and costs.
Enjoy this story? Read the latest news relevant to in-house lawyers on the main page!