Proactive Management of Risks Occupies Center Stage, Survey Says

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Oct. 20 — In the face of rising litigation and regulatory enforcement actions, compliance and legal departments in U.S. and European corporations are focusing on the proactive management of risks, a recent survey found.

In a poll of general counsel and compliance officers, AlixPartners' 2014 Litigation and Corporate Compliance Survey—released Oct. 16—found that 71 percent indicated that they implemented education and training programs to reduce litigation risk to their corporations. Fifty-six percent of the survey respondents also said they reviewed existing compliance programs to identify gaps.

Almost half the respondents—45 percent—indicated that proactive risk management was the most critical issue for their legal departments during the past 12 months. The next most-critical issue—controlling costs—was cited by 43 percent of the respondents.

Most Valuable Activities

Forty-seven percent of the respondents also indicated that proactive risk management will add the most value to their companies during the next 18 to 24 months. The next most-valuable activity is ensuring their companies are complying with regulations, 35 percent of the respondents said.

“With litigation and regulatory-enforcement activities increasing globally, companies are placing a greater emphasis on risk avoidance and mitigation,” Harvey Kelly, global leader of AlixPartners' Financial Advisory Services unit, said in a release. “The compliance function is increasingly important.”

The survey polled general counsel and compliance officers in June at U.S. and European companies with revenues of at least $250 million. The companies were from more than 20 major industries, including financial services, insurance, information technology, energy and health care. Sixty-five percent of the companies were headquartered in the U.S., while 32 percent were headquartered in Europe.

Rising Litigation

In other findings, 32 percent of the respondents said their companies experienced an increase in legal disputes, while 56 percent said the volume stayed the same. Twelve percent of the respondents reported a decline in the number of their legal disputes.

When the respondents were asked to categorize the legal disputes that they experienced during the last year, the top disputes identified were:

• contracts (identified by 58 percent of the respondents);

• employment (50 percent);

• intellectual property or patent infringement (33 percent);

• accounting/financial reporting/disclosure (19 percent); and

• insurance (19 percent).

 

The survey is available at http://www.alixpartners.com/en/MediaCenter/PressReleases/tabid/821/articleType/ArticleView/articleId/1419/Companies-Report-Increasing-Volume-of-Legal-Disputes-and-Rising-Use-of-Outside-Counsel-Continued-Expansion-of-In-house-Legal-Departments.aspx#sthash.9zjDfVX0.dpbs.