Greater powers for general counsels and swift responses to protect companies from the crisis

In challenging times such as those we have recently experienced, where geopolitical, socio-economic and environmental risks are increasingly tending to accumulate and feed off one another, companies must implement timely strategies crisis management strategies, which, rather than addressing damage that is by then almost irreversible, help to resolve it as it arises. Relying above all on the expertise of a general counsel. This need is clearly set out in ‘Steady advisors for an unstable era: fully harnessing the potential of the general counsel in the age of multiple crises’, the report compiled by Economist Enterprise and sponsored by FTI Consulting.

A global survey, compiled by interviewing over 1,000 chief legal officers (heads of legal affairs, also known as general counsels) across Europe, North America, the Middle East, Africa and the Asia-Pacific region, working for organisations with an annual turnover exceeding one billion euros, it emerged that almost 70 per cent of the sample have a formalised crisis plan – evidence that planning has become an integral part of corporate operations – but only 17% adopt a proactive approach to identifying and addressing early warning signs before they escalate. This is an area in which heads of legal affairs, particularly in recent years, appear to have taken on significant importance due to their ability to identify emerging threats, analyse their legal, regulatory and reputational implications and, consequently, devise appropriate responses to protect operations and performance. Yet the resources allocated to support their role and entrust them with the development and implementation of proper roadmaps are still few or inadequate.

What is primarily undermining the recovery process is the ‘wait-and-see’ approach adopted by many organisations: in fact, over 80 per cent only take action when internal assessments flag high risks or when the damage has already been done. Such a delay – as the survey also emphasises – not only robs organisations of precious time for prevention but also limits access to the expertise needed to avoid undesirable and problematic outcomes.

“A crisis rarely remains confined to a single function or market,” said Emanuele Grasso, head of FTI Consulting Italy. “It can quickly spread to the legal, regulatory and operational spheres and reputational spheres. Italian companies, too, must move beyond the mindset of static crisis plans and equip themselves with a truly tested and integrated response, in which the counsel works alongside management and the board of directors from the outset.”

Being proactive also means quickly gathering reliable information . And for this, you need tools that are up to the task. Judging by the responses from the organisations surveyed, this is an area where companies still seem to be falling short: fewer than half use advanced tools such as third-party risk intelligence and predictive analytics. Use of such tools, however, is on the rise in organisations where a proactive approach to crises is standard practice: in this group, for example, 61 per cent use AI-powered monitoring, compared with 46 per cent of the sample.