These Risk Hot Spots Will Create or Exacerbate Legal, Compliance and Privacy Risk
Gartner, Inc. has published a report identifying risk management hot spots for legal and compliance leaders after interviewing many clients and experts and surveying tens of thousands of respondents across multiple surveys. There are 15 main hot spots, spanning five categories, according to Gartner Inc.
“Hot spots reflect current trends in the business and regulatory environment that create or exacerbate the legal, compliance and privacy risks that legal leaders have to manage,” said Stephanie Quaranta, research director in the Gartner Legal and Compliance practice.
The 15 risk hot spots for legal and compliance leaders span 5 categories. They include:
Heightened Regulatory, Trade and Recession Uncertainties Complicate Risk Analysis
Organizations today are operating in an environment of unprecedented uncertainty. “Regulatory uncertainty, geopolitical volatility, and macroeconomic uncertainty combine to make it more difficult for legal leaders to assess and manage organizational risks at the same time, meaning that fast, proactive responses to emerging risks are becoming more crucial to success,” Ms. Quaranta said.
Across all industry segments, at least 60% of respondents reported an increase in the scope of relevant regulatory change in the past three years. The three hot spots include:
· Trade Barriers as a Policy Tool
· Patchwork Regulation in Key Areas
· Heighten Recession Chatter
New Technological Applications Cause Clash of Efficiency and Ethics
Organizations are increasingly able to create new capabilities and value through technological advancements using big data and analytics. However, Ms. Quaranta said growth in these technologies continues to outpace clear regulatory and ethical consensus, leaving organizations struggling to balance current value against the potential for crossing an as-yet undefined line. The hot spots include:
· AI Implementation Without Clear Guidelines
· Employee Monitoring Reducing Trust
· Growing Consumer Demands for Data Privacy
External Change Escalates Complexity of Compliance
As organizations have increasingly adapted their business models to rely on the capabilities of third-party partners and contingent workers, the business ecosystem has become more complex. “Given that more than four-fifths (83%) of the organizations we surveyed are employing an external workforce, it is important for most legal leaders to manage the associated risks,” Ms. Quaranta said.
The hot spots include:
· Shifting Classifications for Gig Workers
· Increased Complexity of Nth-Party Ecosystem
· Unpredictable Foreign Corrupt Practices Act (FCPA) Enforcement Patterns
Rising Social Consciousness Leads to New Stakeholder Demands
Almost nine in 10 (87%) of the employees Gartner surveyed said they expect companies to take a public position on social issues relevant to the business. But this is difficult, and the consequences of getting it wrong are steep as stakeholders, from employees to investors, feel more empowered to demand change. The hot spots include:
· Rising Employee Activism at Work
· ESG at a Corporate Expectation
Advances in Data Processing Heighten Risk to Businesses and Consumers
As both regulators and customers increase their attention on how organizations combine, analyze and otherwise use information, data processing is on pace to surpass data collection as the primary source of privacy risk for organizations. Interest in data lakes among senior executives is growing rapidly, having risen almost fourfold in the past six months, judging from Gartner analysts’ call volumes. This is pressuring legal leaders to manage associated privacy risks. The hot spots include:
· Increasing Use of Biometrics as Identifiers
· Rising Threat of De-anonymization
· Emergence of Data Lakes
· Expanding Definition of Personal Data
“At a time when businesses are already facing so much uncertainty, and when resources for legal, compliance and privacy functions are already stretched thinly, these risk hot spots add an additional layer of complexity for legal leaders to manage,” said Quaranta.
About the Gartner Legal & Compliance Practice
The Gartner Legal & Compliance practice supports senior legal and compliance executives with their most critical priorities. Gartner offers a unique breadth and depth of content to support clients’ individual success and deliver on key initiatives that cut across finance functions to drive business impact. Learn more at https://www.gartner.com/en/legal-compliance/role/legal-compliance-leaders. Follow news and updates from the Gartner Legal & Compliance practice on Twitter and LinkedIn.