Login
Geopolitical tension a ‘significant and rising’ concern for in-house counsel, survey finds
In a world increasingly shaped by geopolitical tensions, new research highlights how these challenges are at the forefront of in-house counsel priorities and what strategies they are implementing to navigate them.
Grace Robbie
The Association of Corporate Counsel (ACC) recently conducted a survey in response to the numerous geopolitical risks emerging globally, compelling businesses to position themselves to manage these challenges effectively.
The report, Navigating Geopolitical Risk: A Brief Guide, is based on findings from a survey of 200 law department leaders from US-based organisations. It examines how in-house counsel are responding to geopolitical risks, identifies the key issues driving these concerns, and outlines the legal and strategic measures being adopted to enhance organisational resilience.
This research was conducted in collaboration with Meg Rithmire, the James E. Robinson professor of business, government, and the international economy at Harvard Business School, along with the US Chamber of Commerce Foundation.
According to the ACC report, 50 per cent of the companies surveyed indicated they have allocated additional resources in the past five years to manage geopolitical risks and mitigate the associated threats.
Notably, 2 per cent of the surveyed companies reported a decrease in resources allocated to managing geopolitical risks over the past five years, while 21 per cent indicated that addressing geopolitical risks does not apply to their organisation.
The survey respondents identified 72 countries they viewed as significant geopolitical threats over the next five years. The eight countries cited as the most concerning are China, Russia, Mexico, and the US (tied), along with Israel, Ukraine, India, and Taiwan.
Respondents expressed specific company activities of concern regarding high-risk countries centred on “protecting intellectual property, protecting sensitive data, competing in global markets, and protecting employees”.
To address these challenges, the report detailed several proactive measures organisations and their in-house legal team have implemented to bolster their resilience. The report revealed that 49 per cent had initiated new due diligence processes to assess better risk associated with foreign engagements, while 45 per cent have developed educational programs to enhance their employees’ understanding of geopolitical risks.
Additionally, 43 per cent of the surveyed companies noted they are engaging in scenario planning, which allows them to anticipate and prepare for various geopolitical contingencies.
However, a majority of companies plan to either “increase or maintain” their engagement with most of these high-risk nations. An exception is Russia, with 18 per cent of the respondents indicating plans to reduce their engagement, while 53 per cent stated they would cease operations entirely. In contrast, 29 per cent of respondents expressed plans to decrease engagement with China, with only 10 per cent intending to halt activities altogether.
The ACC president and CEO, Veta T. Richardson, emphasised the vital role of in-house counsel in navigating the complexities associated with geopolitical risks.
“In-house counsel are continually scanning the horizon for threats to their business, and it’s clear that geopolitical risk around the world is a significant and rising source of concern,” Richardson said.
“A greater number of powerful actors are shaping an increasingly complex global system. This is further complicated by the fact that the world is more interconnected than ever, as regional wars, infectious diseases, regulations, supply chains, sanctions, and climate change from carbon emissions are just some of the issues impacting businesses globally.”
Rithmire, who collaborated on the survey, highlighted the importance of a legal perspective in navigating the complexities of the geopolitical landscape.
“It is important to have the views of legal officers to understand how firms are navigating the new and considerably complex geopolitical landscape,” she said.
“Legal officers have a ‘whole-of-firm’ view, and they are now leading their companies not only in novel compliance requirements but forward-looking processes for protecting company assets and reputations.”
