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Corporate counsel should take a “three-dimensional” or “enterprise-wide” risk evaluation approach when advising management or resolving strategic issues, according to today’s InsideCounsel SuperConference panel discussion entitled, “Managing Enterprise-Wide Risk.”
Leading the discussion was Jenner & Block Partner Paul F. Jock, Chair of the Firm’s Private Equity/Investment Management Practice and former Senior Vice President, General Counsel and Director and member of the Executive Committee of General Motors Asset Management. Also featured were A. Brad Busscher, Managing Director & General Counsel, Mesirow Financial Inc., and Lorraine K. Koc, General Counsel, Deb Shops Inc.
Mr. Jock explained that enterprise-wide risk management (ERM) professionals are a “hybrid” of legal counselors, risk managers and business executives. By providing an analysis of the company’s “holistic” or “three-dimensional” risk, including operational, tax and product risk, among others, the ERM process can help management make informed business decisions. Mr. Jock suggested that an ERM program should work to analyze the current state of risk for the company as well as the organization’s “risk appetite” for future initiatives.
ERM is an unwritten part of the in-house counsel “repertoire” for smaller organizations, according to Ms. Koc. Among other responsibilities, the general counsel for a smaller business negotiates purchase contracts and oversees regulatory compliance, but formalizing the responsibilities under the ERM banner “adds value to the general counsel’s position,” she said, and communicates the breadth of responsibilities to the entire organization.
However, Mr. Busscher cautioned that although in-house attorneys have the necessary skills and knowledge to offer by way of ERM, there are some “drawbacks” to the concept. For instance, there can be a tension between the roles of the general counsel as a compliance officer and a “business creator.” The former “reins in” activity, while the latter serves a creative role, according to Mr. Busscher.