2017 to 2019: The reputational risks concerning firms over the last 2 years
The concern and importance on ethical conduct in the workplace ranked as one of the largest reputational risks in 2017, and it still holds true now.
To analyse how the in-house legal sector changed focus around regulatory risks, firm Norton Rose Fulbright (NRF) looked back at research from 2017 and compared notes on 2019’s data. It found ethics, social media, technology and governance continue to rank as some of the most critical and current fears for the sector.
The law firm noted: “Without question, the revelations about poor conduct arising from the Hayne royal commission and the consequent reputational damage to the financial services entities are evidence that these predictions held true for the sector.”
Following ethical conduct as the number one trend in 2017 and 2019 were social media risks, environmental and social governance (ESG) and changing investor preferences respectively.
Concerns around supply change and artificial intelligence found a failing, with in-house reporting there is a blind spot in both of these areas.
In 2017, only 46 per cent of respondents noted supply chain risks, and this fell to only 41 per cent in 2019. NRF said it may “indicate that organisations are narrowly focused on risk and have a potentially serious blind spot when it comes to risks associated with insufficient diligence and monitoring of their network of suppliers”.
In new technologies, NRF found 68 per cent of respondents do not use analytics, and as such have no confident method to identify compliance breaches which are likely to result in reputational damage. An even greater 80 per cent said they do not expect for their organisation to deploy analytics technologies in the next year.
In terms of social media, NRF reported numerous examples of the increasing influence of social media on reputation, noting the #MeToo movement as well as the intensifying focus on corporate positioning on social issues, such as equality and climate change.
“Understanding culture and how processes, systems and behavioural norms and the expectations create the risk of poor conduct – which may ultimately lead to reputational damage – must therefore be an important ongoing activity for all organisations,” NRF said.