In 2024, legal, compliance, and privacy leaders are aiming higher than ever before. According to a recent survey by Gartner, these professionals want to amplify their impact on company strategy, recognising the need to do more than just manage risks and ensure compliance. Instead, their top priority is to become pivotal players in steering business decisions, navigating new technologies, and responding to ever-evolving regulatory landscapes.
But it’s not just about adding influence. Legal and compliance leaders are grappling with the rapid pace of change—especially regarding third-party risk management (TPRM) and the fast-moving nature of regulatory compliance. So, what are the top challenges they face, and what strategies can help them step up to the plate?
Let’s dive in.
Why Legal and Compliance Leaders Must Strengthen Their Strategic Influence
In today’s business environment, legal and compliance leaders are no longer just the ones ensuring the company follows the rules. As businesses face new challenges, such as geopolitical risks and emerging technologies like generative AI, the role of legal and compliance professionals has expanded. These leaders are now expected to not only advise on risk but to actively shape strategy and business direction.
A Gartner survey of 179 leaders found that their top priority for 2024 is to increase their impact on company strategy. This involves influencing decision-makers and ensuring that legal, compliance, and risk considerations are integrated into business strategy from the get-go.
- Legal experts need to offer guidance on balancing risk and reward, enabling the business to take calculated risks without putting itself in jeopardy.
- Compliance officers must ensure that the company’s compliance training is relevant, up-to-date, and able to cater to evolving regulatory frameworks.
- Privacy leaders face the delicate task of managing personal data security while ensuring the business isn’t bogged down by overly strict regulations.
So, what does this mean for legal and compliance professionals? It means developing not only their legal expertise but also their leadership, communication, and influence skills.
The Top Priorities for Legal, Compliance, and Privacy Leaders in 2024
1. Strengthening Third-Party Risk Management (TPRM)
Third-party risk management is increasingly a major focus for legal and compliance leaders, and for good reason. Businesses today rely heavily on third-party vendors, contractors, and suppliers. Whether it’s outsourcing services, cloud-based software, or AI-driven solutions, companies must ensure that their third-party relationships don’t expose them to unnecessary legal, financial, or reputational risks.
The Corporate Sustainability Reporting Directive (CSRD), SEC Regulation S-K, and Germany’s Supply Chain Due Diligence Act are just a few examples of new legislation that impose stringent standards on how businesses must monitor third-party risks related to human rights and environmental sustainability. This is where strong TPRM programs come in.
Improving TPRM processes and technologies has become a top priority for many leaders. According to the Gartner survey, TPRM was the third-most selected priority, reflecting the increasing demand for accountability in managing third-party risks.
- Legal and compliance leaders must design risk management frameworks that can detect and mitigate risks associated with environmental, social, and governance (ESG) factors.
- TPRM systems need to go beyond basic compliance checks to incorporate deeper due diligence processes.
2. Keeping Compliance Programs in Sync with Regulatory Changes
With regulations changing faster than ever, legal and compliance leaders are under constant pressure to ensure that their compliance programs evolve in tandem. From GDPR in Europe to the California Consumer Privacy Act (CCPA) in the U.S., the need for a robust compliance system is critical.
One of the biggest hurdles is staying on top of rapidly shifting regulatory requirements. Legal leaders are looking for ways to implement regulatory intelligence systems that can provide timely updates on changing regulations and streamline compliance processes.
- Many companies have dispersed operations in multiple jurisdictions, so understanding how new regulations affect different regions is a massive challenge.
- Cross-border compliance requires strategic thinking to ensure businesses comply with both local and international laws.
As geopolitical tensions and new technologies impact business environments, staying ahead of these regulatory changes can mean the difference between success and failure. This is why ensuring compliance program strategy can keep up with these shifts is paramount.
3. Leading with a Business-Centric Approach
Legal and compliance leaders must step beyond the typical role of risk managers and become strategic advisors to the C-suite and business teams. Legal counsel needs to be integrated into high-level business decisions from the beginning—whether that’s in the context of a new product launch, partnerships, or M&A activity.
- Business-centric thinking allows legal leaders to guide the company in balancing risk with business benefits, ensuring compliance while still being able to drive innovation and growth.
- Legal professionals are also expected to adapt their communication style to suit different audiences, from the boardroom to front-line employees, ensuring everyone understands and upholds compliance objectives.
The Evolving Role of Legal and Compliance Professionals
Legal and compliance professionals are increasingly seen as influencers, diplomats, and negotiators rather than just risk managers. Their role now requires them to build stronger relationships with stakeholders across the business, from the C-suite to operational teams, in order to influence decisions that balance legal requirements with business needs.
Real-World Example: The Impact of Generative AI on Legal and Compliance
Take the rise of generative AI as a prime example. As businesses begin to adopt AI technologies, the legal and compliance team must step in to ensure that these tools are used ethically and comply with emerging laws, such as AI transparency or intellectual property (IP) rights. This is an area where legal and compliance leaders can have a direct impact on shaping business strategy by helping businesses navigate these new challenges.
Leadership Skills for Legal and Compliance Professionals
To make a significant impact, legal and compliance leaders must also develop leadership qualities that go beyond their technical expertise.
- Building trust: Effective communication with internal stakeholders is crucial in ensuring that the company remains compliant and prepared for future regulatory requirements.
- Proactive risk identification: Leaders must have the ability to anticipate risks before they become full-fledged problems, empowering the business to act swiftly and confidently.
Conclusion: Rising to the Challenge
As we move into 2024, legal, compliance, and privacy leaders must focus on improving their influence on company strategy. They must strengthen TPRM systems, ensure compliance programs can keep pace with regulatory changes, and develop leadership skills to influence business decisions effectively. By doing so, they can not only mitigate risks but also drive innovation and growth, positioning themselves as integral contributors to overall business success.
