Risk blind spots are growing — 4 moves GCs can make to close the gap
This article originally appeared in our July 17 edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe here.
Imagine trying to understand an approaching storm by looking through a slice of Swiss cheese. You might catch glimpses of dark clouds or shifting light, but miss the lightning striking a nearby tree — or the sparks on the roof over your head.
You could miss the full scope of the danger unfolding right in front of you.
Do today’s governance leaders have a similarly fragmented view of business risk? Our recent surveys seem to indicate so.
A fragmented view: GCs and boards see risk through different lenses
When asked about their top concerns, over two-thirds (65%) of general counsels (GCs) focused on changes in the regulatory environment. One survey respondent specifically called out evolving frameworks for AI, data and consumer privacy, especially at the state level. Another noted the uncertainty of “whipsawing policies and enforcement priorities.”
Meanwhile, boards gave regulatory change a distant backseat to tariffs. A full 81% of directors ranked these ever-changing trade developments as their top risk, compared with less than half (41%) of GCs.
Furthermore, GCs reported a gloomier view of business risk overall. In Q2, they gave it a score of 7.4 points(out of a maximum 10), up from 6.8 in Q1. Meanwhile, directors’ ratings stayed constant at 6.8.
Who’s right?
You could debate this question ad nauseam, or you could consider what’s at stake if the two sides don’t come together to build a complete picture.
Fortunately, many GCs are already minding the gaps:
- Over half (51%) told us they’re increasing their participation in leadership meetings, as well as communicating more with senior management
- 45% are boosting external research
- Four out of ten (41%) said they are using new technologies like AI for real-time data and analysis
What can GCs take away from these responses?
Takeaway 1: Keep talking and stay on top of change
Boards want to hear their legal teams’ views on strategy, risk, and especially, the regulations that might impact the things the board cares most about, for example, AI innovation, trade policy, CEO compensation and succession, and other trending topics. In fact, a full 42% told us they want to increase the frequency of board-GC conversations.
If these aren’t recurring items on your calendar, along with regular risk reports, now is the time to schedule them.
Takeaway 2: Be prepared to act
These frequent, proactive reviews should include next steps when a situation merits action, like tabletop exercises, targeted mitigation strategies and beyond.
Fortunately, many leaders are taking heed. In our Directors Confidence Index, 47%of respondents said they are using scenario planning to navigate the current environment.
Takeaway 3: Embrace AI’s full analytic powers
Some more good news from our survey: GCs are using AI. The less-than-ideal aspect of this is that they’re often limiting their AI use to basic activities like drafting documents and reviewing contracts.
For many GCs, concerns about data protection and regulatory compliance hold them back. Others are haunted by the possibility of hallucinations or errors.
This reticence comes at a cost. Automation enables continuous monitoring, and AI-powered advanced analytics are made for high-stakes conversations about risk, delivering data, insight and context faster and more effectively than any human. Legal teams who fail to tap these powers for tracking threats, regulatory changes and organizational health risk falling behind as strategic advisors.
Takeaway 4: Keep learning
As boards increasingly expect legal leaders to double as strategic advisors, ongoing education helps them meet these rising expectations — and keep pace with today’s constantly evolving threats and regulations.
Delve even deeper into the top concerns of GCs and boards — and how they’re taking action to protect their organizations and the bottom line. Download our latest Business Risk Index and Directors Confidence Index: Navigating Risk and Uncertainty.
Want regular access to original research in the field of GRC? Bookmark our Diligent Institute hub page for the latest surveys, podcasts and reports.
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