Corporate culture wreaking havoc on legal and reputational risk

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Corporate culture wreaking havoc on legal and reputational risk

Rachel Nicolson

An international law firm has warned that corporate culture has become an increasing legal and reputational risk and provided tips on how to combat the problem. 

A report released by Allens, Thriving in an Era of Scrutiny, has found that corporate culture is identified as a rising legal and reputational risk for companies.

It noted that general counsel, governance and compliance teams have an “essential contribution to make to assessment of culture and advice to senior executives”. Further, it said that there is a greater need for a clearly articulated culture from companies across the board, and an explanation of how that culture relates to the corporation’s strategy, organisational structure and governance arrangements.

Commenting on the findings, Allens partner and head of the firm’s risk and compliance advisory practice Rachel Nicolson said: “Our research has identified that the law is very clear about what really matters and it is very clear there is a price attached to getting it wrong – including greater: regulatory penalties, exposure for executives – reputationally and legally, willingness from regulators to litigate, risk of shareholder and consumer activism and risk to attracting and retaining top talent”.

“There is also significant upside for companies who get culture right, as those with a ‘good reputation’ tend to attract and retain talent, increase shareholder value and enjoy positive engagement with their customers and community,” she said, noting that “at the economic level, too, a positive, thriving and well-articulated culture can deliver dramatic and sustained increases in productivity and performance”.

“To ensure an assessment stands up to regulatory and legal scrutiny, it is necessary to implement independent, cross-functional and ongoing assessments, and have legal and compliance leads involved.”


According to the report, there are several practices that can enable organisations in making a meaningful mindset shift.

This includes, it said, developing an action plan for the business where there are opportunities to strengthen corporate culture, constant testing to see whether improvements have achieved success and ongoing review.

“Boards and management teams willing to consider issues relevant to culture, will be better-placed to set the right tone and earn the respect of employees, customers and regulators,” Ms Nicolson said.

Emma Ryan

Emma Ryan

Emma Ryan is the deputy head of editorial at Momentum Media and editor of its legal publication, Lawyers Weekly. 

She graduated from Charles Sturt University with a Bachelor of Communications (Journalism).

Email Emma on: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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