The Economist's General Counsel Roundtable Session Review: Balancing the growth imperative with escalating risk
The second session of The Economist's General Counsel Roundtable was a panel on the topic of "Balancing the growth imperative with escalating risk." Matthew Bishop, the US Business Editor for The Economist moderated the panel, which included John Lynch, US General Counsel of BP America and Deirdre Stanley, the Executive Vice-president and General Counsel of Thomson Reuters.
Lynch started with his view of the role of the general counsel in risk management, based on his own experience. He feels there's an element of getting ahead of governance and reporting to the Board, but the role of the GC is different for each company, based on its needs. The answer to the role of the GC lies with the unique factors of the company, subject to risk, which is a broad topic. He then defined what he sees as the four different types of risk: compliance risk, legal risk, function risk, and event risk. Stanley said that at Thomson Reuters, it is lightly regulated, so their strategies and processes aren't tied up in a lot of regulation. She sees the role of the GC as risk identification and risk environment identification, which she defined as the point at which they trip up on a new regulation that wasn't applicable before. As the Foreign Corrupt Practices Act seeks to become increasingly global, the articulation of risk itself is important, because changing operations increases the risk that they might not have otherwise identified. Mitigation is the third part of a GC's responsibilities and requires the close integration of legal with operations.
Bishop then asked, with the push to be more global, how do they help managers to understand how to do business in China, for example. Lynch answered that they tell them that risk management is what they see in the case law around governance, not what Seth Harris described about deciding whether to comply. Bishop followed up by asked about the trade-off between growth and risk management. Lynch agreed that he feels that there is a trade-off, but they're trying to prevent it at BP. He said that to grow, they can either access a new country or become more efficient, which is tougher. To grow, they need to identify the risks, a mitigation plan, and how to fund it. Stanley said that she doesn't see it as a trade-off, but as a balance. As in any business, without risk, there's no reward. The challenge is how to grow in a greater risk environment, so she works to instill risk management awareness in managers and encourages leaders to be involved in all incremental changes. Lynch added that it's important to have legal and compliance in the same complement as the business is expanding, and not after or towards the end of planning.