For an in-house lawyer, understanding and managing your company’s risks is intrinsic to your role. This task arises in areas that one is trained to deal with such as contractual terms, intellectual property, and regulatory issues. But the unpredictable, robust shift in global and geopolitical dynamics takes this challenge up a notch.
Companies were hoping for a semblance of simplicity on the other side of the Covid-19 pandemic. Yet, the newly born post-pandemic world brought waves of change, causing businesses and legal departments to realign their strategies. Anticipated challenges consist of contending with a hybrid and remote work environment, the rise of artificial intelligence, legal challenges to DEI (Diversity, Equity, and Inclusion) and ESG (Environmental, Social, and Governance) initiatives, stringent regulatory clampdowns on big technology companies, and criminal prosecutions of business leaders.
Unquestionably, it is becoming increasingly hard to turn a blind eye to the geopolitical risks that legal departments are faced with today and for the foreseeable future. The ongoing Ukraine war, an escalating conflict in the Middle East, a drought threatening the essential Panama Canal trade route, a warming planet, and increasing border tension between the US and its largest trading partner, Mexico, all contribute to this list of concerns. The Economist anticipates 2024 to be an incredibly volatile election year, with 76 countries heading to the polls and the United States experiencing a pivotal election.
Successful crisis management often involves anticipation and planning. The responsibility of outlining a strategy for tackling geopolitical risks usually falls on in-house legal leaders. In-house attorneys are not expected to shoulder this responsibility alone, and can establish a task force comprising various departments for a cohesive crisis management planning exercise. It’s also important to engage external support to stay abreast of developments in areas of interest.
The journey to understanding your own business better and ultimately becoming a more proficient lawyer involves initially figuring out the geographical dynamics of your business- its employees, suppliers, and stakeholders. What follows is an identification of geopolitical risks that may impact your organization, forming a creative “what if” exercise designed to explore potential threats and opportunities.
The end result of this hard work should include a visual artifact, a matrix that categorizes risks based on size and likelihood. This insight can inform business decisions involving suppliers, distributors, and markets. While not all hypothetical geopolitical risks can be resolved, at least this process should facilitate better understanding of your genuine exposure to geopolitical events and readiness to assess options rapidly, under pressure, when crisis strikes.
Learn from Rob Chesnut, an experienced consultant on legal and ethical issues who served as general counsel and chief ethics officer at Airbnb and spent over a decade as a Justice Department prosecutor.
To further explore this and related topics, be sure to Read More Good Counsel.