The adage “The only constant is change” is one with which legal, compliance and privacy executives are all too familiar. Technological advancement is a primary, most obvious, driver of such change, creating both efficiencies and ethical dilemmas that expose organizations to new and additional risks — but it is not the only source.
“Legal leaders must also manage risks related to heightened uncertainties in the external environment, the increasing complexity of regulatory compliance, rising social consciousness that creates new stakeholder demands of corporations, and advances in data processing that heighten risk for both businesses and consumers,” says Stephanie Quaranta, Director and Team Manager, Gartner.
“Although these risks are emerging, and no clear patterns or playbooks for success have yet been established, legal leaders must still be ready to prepare their boards, senior leaders and functional partners to respond quickly and effectively.”
Knowing which risks to focus on is key, but so is understanding the implications and the right steps to take. The 2020 Gartner Legal and Compliance Hot Spots report — based on interviews and survey data from legal, compliance and privacy executives — helps prepare legal leaders by identifying five risk themes that organizations must be ready to manage.
- Heightened regulatory, trade and recession uncertainties complicate risk analysis. Organizations today operate in an environment of unprecedented uncertainty. Ever-changing regulations, geopolitical volatility and macroeconomic conditions make it harder for legal leaders to assess and manage organizational risks in an environment where fast, proactive responses to emerging risks are becoming more crucial to success.
- Clash of efficiency and ethics in new tech applications. Organizations can create new capabilities and value through technological advancements like AI, the increasing use of big data and more advanced analytics. Yet growth in these technologies continues to outpace clear regulatory and ethical consensus, leaving organizations struggling to balance current value against the potential for doing irreparable damage.
- External change escalates complexity of compliance. The business ecosystem is increasingly complex as more organizations partner with third-party providers and hire contingent workers. Due to recent regulatory developments, these relationships have opened organizations up to additional risk. Third parties operate within critical organization functions, systems and data, which creates new compliance challenges and risk of financial and reputational damage.
- Rising social consciousness leads to challenging stakeholder demands. Gone are the days when stakeholder demands focused primarily on increasing shareholder value. Today organizations are being pushed to do more as stakeholders — from employees to investors — feel more empowered to demand change. Although the consequences of getting it wrong are steep, significant opportunities exist for organizations that can successfully navigate these new demands.
- Advances in data processing heighten risk to businesses and consumers. Data is a key differentiator for organizations in improving risk management, maintaining competitive advantage and increasing efficiency. Public scrutiny and heightened regulatory attention is driving organizations to focus largely on data collection to help manage risk and protect customer information. Despite concerns around how organizations combine, analyze and use information, data processing is now on pace to surpass data collection as the primary source of privacy risk for organizations.
Learn more: 2020 legal hot spots