Companies are facing more challenges than ever as they try to grow while remaining compliant.
Effective risk management has long been a central element of any successful business. However, the last few years have seen risk management rise even further up the corporate agenda. Complex macroeconomic conditions coupled with heightened geopolitical tensions, rising levels of regulation, new challenges with regard to environmental, social, and governance (ESG), and an acceleration of new technologies such as artificial intelligence (AI), have all combined to increase the need for robust risk management frameworks.
In this environment, it’s unsurprising that corporations have continued to grow and expand their risk and compliance teams while spending on best-in-class technology platforms and working with trusted outsourcing partners to optimize their risk management capabilities.
What general counsels told us about risks
CSC’s General Counsel Barometer 2024, our recently published annual study among 400 general counsels (GCs) and senior legal professionals across the world, found that a third (35%) of multinational companies are planning to expand into additional jurisdictions in 2024.
However, around 60% said they faced challenges when putting new infrastructure in place, 31% admitted to experiencing issues with local privacy laws and jurisdictions, and a quarter (26%) said they were not confident in their ability to verify data across jurisdictions.
Challenges such as these highlight the need for comprehensive compliance partnerships that support strategic growth initiatives ensuring businesses remain on top of their risks.
2024: A heightened year of risks facing corporations?
Key risk areas of focus in 2024 for businesses include the financial pressures still being felt from the COVID-19 pandemic, lingering inflation, and ongoing supply chain issues.
In addition to these, 2024 is a record year[1] for national elections including the U.S., U.K., India, Germany, and Mexico, among others. Why is this important? Because elections bring change—sometimes significant change—and require ongoing monitoring and planning to understand the risks and stay ahead of the proposed changes coming down the track.
Developments in AI and its use in business will also continue. Prudent organizations are already investing in and deploying experts to identify the opportunities and better understand the risks these technologies will bring to stay ahead of their competitors and better serve their clients.
Cybercrime is, and will remain, a hot risk topic, particularly given ongoing conflicts and sovereign tensions across the globe meaning the likelihood of potential cyber threats to businesses is heightened.
Increased regulation is also adding layers of concern for compliance teams, with additional requirements and new rules adding further complexity within the overall risk landscape. The deadline, for instance, for businesses to meet the EU’s new Digital Operational Resilience Act (DORA)—which aims to significantly strengthen the IT security of financial entities—is just months away (January 17, 2025). Entities found to be in violation of the Act’s requirements may face fines of up to 2% of their total annual worldwide turnover.
The new Anti-Money Laundering Authority (AMLA), being set up in Frankfurt, will also inevitably keep lots of European businesses busy while they monitor developments. However, a standardized and consistent AML framework will, in time, allow businesses to better interpret, apply, and embed the rules within their day-to-day operations.
The rise of real time key risk indicator reporting
As the current risk landscape has increased, an emerging trend is a growing focus by businesses to move away from the outdated annual risk assessment cycles and become more dynamic—automating real-time key risk indicators (KRIs) reporting.
Many have begun thinking about what this could mean for their business processes and risk management approach, ensuring that senior management teams are armed with more real-time risk data, enabling better strategic and tactical decisions to be made.
This approach offers more agility and the ability to stay ahead of the ever-evolving risks faced, allowing more preemptive and real-time control measures to be put in place. In our view, investing in the right people and technology to aid with this automated reporting will be key across the industry for those who wish to keep a competitive edge.
CSC has 125 years’ experience in risk management
It’s an old adage, but where there’s risk, there’s opportunity.
For CSC, a business that has been operating since two Delaware attorneys formed it 125 years ago in 1899, there have clearly been plenty of risks and opportunities to navigate. Businesses don’t thrive, as CSC has, without effective risk management being part of the very fabric of what they do.
Today, CSC is comprised of over 8,500 colleagues offering business administrative and corporate client solutions in over 140 jurisdictions.
Our own risk framework, deeply embedded across the business, helps us identify, assess, and mitigate potential risks to our overall business objectives, ensuring that we continue to sustainably serve our clients across the globe while navigating the current challenging macroeconomic and geopolitical times.
We’re ready to talk
An effective risk management framework not only safeguards a business but also its reputation, enhances resilience, fosters trust with its stakeholders, and supports better strategic decision making. For CSC, we believe our approach to risk management ensures we’ll still be thriving in another 125 years.
If you’d like to talk further about how CSC can help, please get in touch.
