Changes in corporate technology, regulation and consumer preferences are interacting to reshape markets at increasing speed. For legal and compliance executives, this means managing new-to-world risks at an accelerated pace and with heightened business client expectations. It also means that audit committees are increasingly relying on legal to provide assurance over a wide set of risks ranging from Brexit to harassment to cybersecurity.

To frame this evolving corporate and legal risk environment Gartner has identified four key themes that will define legal department work across 2018.

Theme 1: Perpetual Strategic Change

According to a recent Gartner survey, 73 percent of executives say the pace of organizational change is faster than ever and will continue to accelerate. The business cycle moves faster than ever and leadership teams are under tremendous pressure from investors and boards for their growth to keep the pace. As a result, 92 percent of companies are redesigning business models and operations, while 70 percent of companies say that their ability to develop new products and services quickly is a competitive necessity. It is no longer a world of periodic disruption—it is a world of perpetual change.

Legal and compliance executives must enable this constant reinvention while protecting core legal assets and minimizing unwanted risk through changing business models. For legal, this means proactively assessing the risk of and preparing the capacity to support large scale M&A, shifts in IP value, extended third-party ecosystems and aggressive workforce planning.

Theme 2: Digitization and Technology Risk

Seventy one percent of Fortune 500 CEOs say their companies are now technology companies and corporate investment in digital technologies (e.g., robotics, AI) are rapidly increasing. There's no doubting that this investment in digital technology will alter the ways in which organizations operate. As corporate processes, services and operations become increasingly digitized and interconnected, legal and compliance teams must ensure that advances don't outpace risk management capacity.

First, legal and compliance must get comfortable acting as enablers of technology adoption. In general, the greater corporate risk is adapting too slowly to change or failing to build necessary IT capacity rather than cyberattack or privacy breach. Legal must support the use of new technologies.

Second, legal must build a sustainable information governance framework that meets the rising information security and privacy challenges. The combination of increased privacy regulation, interdependence of networks and devices, and volume of ransomware attacks makes cybersecurity and privacy top risks for companies. Data breaches already happen daily, with average cost of a privacy breach at $3.62 million and cybercrime is expected to reach $6 trillion by 2021. To combat this, legal must coordinate with information security and other assurance functions to build consensus on information risk appetite and assess adequacy of information controls, policies and training for employees. Legal should also create data breach response plans and run rehearsals or tabletop exercises designed to replicate real-life scenarios.

Theme 3: Geopolitical and Regulatory Volatility

Policy uncertainty was a major risk theme in 2017 and is likely continue in 2018. The range of potential political, legislative and regulatory outcomes seems wider than it has in the last decade. Anti-globalist sentiment, global trade fears and the rising risk of cross-border conflict all drive political risk and geopolitical uncertainty. Business leaders agree the uncertainty of the global economy will significantly impact earnings and complicate strategic planning in the coming years.

For legal and compliance executives, the current political landscape means potential changes to trade, tax and competition policy. Legal needs to identify and coordinate regulatory tracking efforts with regulatory affairs and other relevant corporate functions while building strategies for how the company develops its public position on sensitive political issues.

Political instability also makes it more likely that global legal and regulatory frameworks will fragment as more countries assert their place in the global regulatory and economic environment. For example, countries including the United States, United Kingdom, Germany, China, Canada, Mexico and Colombia have all recently created new privacy and data protection regulations—a trend that is likely to continue in the next few years as nascent legal issues (e.g., AI liability) become regulated. This fragmentation makes it harder for the business to execute quickly and at scale. It will be increasingly important for legal teams to develop transparent standards when determining when to adopt global policy standards and when to allow variation by jurisdiction.

Theme 4: Transparency and Public Expectation

With everyone having some form of social media and/or other communication platform, it's now easier than ever to get an inside look into organizations. Unfortunately, companies aren't always prepared for the transparency or the public's reaction to it. Companies must be prepared for and responsive to emerging, and sometimes viral, news stories by developing strategies for shaping public perception.

One way legal can do this is by championing a corporate culture of integrity. A company's culture, that is, the deeply held assumptions and beliefs among employees about how the company operates, is now considered one of its most important corporate assets. C-suite executives recognize the importance of a positive corporate culture that aligns to organizational objectives, with 87 percent of executives considering this to be a competitive advantage. Further, a weak culture leads to a poor compliance environment and lower performance, with employees in lower-integrity cultures being 67 percent more likely to observe misconduct happening in their organization.

Another way legal can prepare is through management of the company's reputation. The recent wave of corporate scandals has undermined an already-declining trust in companies from employees, consumers and policymakers. In fact, the 2017 Edelman Trust Barometer reveals only 52 percent of consumers trust corporations and only 37 percent of consumers view CEOs as being “credible.”

To maintain corporate reputation and trust, today's corporate legal teams must confirm that their organization has an existing crisis management that is both documented and clarifies functional responsibilities. Further, legal teams must work with their CEOs and heads of HR to adapt your value proposition to the needs of key communities.

Legal's Challenge

Across 2018, it will be critical for organizations to proactively manage these risks. To do so, legal must provide assurance over new risks that may not be traditionally part of its portfolio and continue to evolve its approach while continuing to support business strategy.

Abbott Martin is a legal research leader at Gartner, a research and advisory company headquartered in Stamford, Connecticut.