The next two to three years will radically redefine "high stakes" and risk for boards and CEOs as sprouting challenges driven by artificial intelligence (AI), cybersecurity and stakeholder communications escalate and demand more than traditional action and oversight.
Board legal advisors will no longer merely focus on how to mitigate risks; they will guide organizations through AI’s uncharted territory, where business decisions increasingly intersect with emerging domestic and international regulations, as well as ethical complexities, coupled with heightened immediacy.
As domestic and international laws evolve, legal teams must proactively stay ahead, anticipating changes and ensuring strategies align with compliance, innovation and regulation. Lawyers should see this as an opportunity to participate in various trade association legislative initiatives.
The development and use of AI is evolving at ludicrous velocity, becoming a thrusting force behind technological change. Traditional leadership priorities—profit margins and operational efficiency—must now coexist with a complex array of new technology challenges that demand immediate understanding and faster decision making.
Concerns are not abstract—they are already at the boardroom table.
AI is reshaping business and governments in ways that require a sophisticated understanding of new potential liability, compliance requirements and increased regulatory oversight emerging with AI. Business leaders will increasingly rely on legal advisors to navigate this uncharted territory.
The question is no longer just about risk mitigation—it's if leadership can adapt fast enough to thrive, or risk not only liability but extinction.
As Peter Drucker famously stated, "The greatest danger in times of turbulence is not the turbulence—it is to act with yesterday's logic."
Therefore, to stay ahead, counsel must guide boards and leaders through six key critical challenges that will redefine risk management, governance and legal strategies in today's global business and financial markets.
1. Embedding AI: Negotiating legal loopholes without tripping over algorithms
AI’s potential extends far beyond operational efficiency, with strategic implications that corporate counsel must understand and address. Last quarter, 36 percent of S&P 500 companies mentioned AI in earnings calls, but only 13 percent of them have AI expertise on their boards. Boards must engage experienced advisors to elevate AI literacy, ensuring it's treated as a strategic asset rather than just a tool.
Tip for Success: Push boards to adopt an AI governance framework, including an AI Code of Conduct, and structure capital deployment strategies through a legal lens.
2. Meltdown to mellow: Navigating legal shields in the age of viral oops
In this digital arena, reputation is not just a stakeholder communications issue—it’s a legal one. Counsel should ensure companies treat reputation as a strategic asset underpinned by strong legal safeguards. Data breaches, ESG failures and privacy violations are not just business risks—they lead directly to liability and public nightmares. Fast, authentic communication is key to managing reputational damage. Slow responses laced with legalese or jargon create additional risks. Corporate social responsibility (CSR) initiatives should be backed by measurable, legally sound commitments to avoid litigation.
Tip for Success: Help create a strategy that ensures fast, transparent and accurate communication to protect operations, revenue and reputation that addresses all stakeholders. Work closely with communications professionals to align messaging with legal obligations and participate in scenario-based crisis training sessions.
3. Shareholders to stakeholders: New rules of success
The shift toward stakeholder capitalism means boards and CEOs must consider a broader set of interests beyond shareholders. Corporate counsel now face the challenges of adapting and evolving AI regulations while managing rising stakeholder expectations. As laws develop, legal teams must ensure compliance and ethical alignment, shaping strategies that not only foster innovation but also meet the demands of employees, customers and regulators.
Tip for Success: Develop a stakeholder engagement strategy that aligns with legal obligations and supports transparent communications. Ensure leadership is well-versed in how stakeholder capitalism affects corporate governance and review the legal frameworks guiding these interactions.
4. Digital gold rush: transform without leaving doors open for cybercriminals
The SEC’s 2023 cybersecurity rules mandate greater cybersecurity transparency and risk management, governance and incident reporting. This creates a significant new area of responsibility for corporate counsel, who must ensure the company complies with regulations and discloses material cybersecurity incidents accurately and on a timely basis. With new SEC Regulations, cybersecurity is no longer an afterthought—it must be integrated into a digital transformation strategy. Counsel should work to conduct regular audits, ensure robust incident response plans and align digital growth with evolving legal standards on cybersecurity.
Tip for Success: Advise on the creation of a legally sound incident response plan that satisfies SEC requirements. Ensure board members are regularly briefed on cybersecurity risks and integrate AI-driven threat detection strategies to mitigate legal exposure.
5. How agile and inclusive cultures are shaping tomorrow’s legal landscape
Rigid hierarchies can’t keep pace with today’s fast paced global markets. Leadership must adopt inclusive practices, and legal counsel ensures these frameworks comply with current and emerging regulations. Counsel plays a key role in preventing governance failures. Inclusion is both a strategic and legal necessity, driving innovation while ensuring compliance with diversity and anti-discrimination laws.
Tip for Success: Establish governance processes that are not only legally compliant but help to drive strategic initiatives that exceed legal standards while keeping the company competitive.
6. From remote to robots: navigating new workplace frontier
As companies expand remote work and automation, corporate counsel must navigate the legal intricacies of this workforce transformation. Strategies need to adjust emerging labor laws, reflecting the impact of automation on jobs…and evolve with new workforce expectations. While current regulations cover employee reductions, no laws yet address liability for replacing humans with robots or AI. Remote work introduces new challenges in workplace privacy, intellectual property, and employee surveillance—all are rapidly evolving. Upskilling and reskilling programs are crucial to retaining a competitive workforce while ensuring hybrid models comply with employment laws.
Tip for Success: Guide leadership through legal complexities of remote work and automation, ensuring compliance with emerging labor laws and creating forward-thinking workforce policies that minimize risk.
"What we do in life echoes in eternity." – Maximus, Gladiator
Companies and boards that stick to outdated approaches will fall behind. Lead decisively through complex challenges, ensuring compliance, resilience, and long-term success.
Published November 18, 2024.
