Clayton Utz highlights legal risk 'disconnect'

Lawyers raise concern that not all may be on same page regarding exposure to lawsw and regulations

By Rob McKay |October 17, 2011

Major law firm Clayton Utz has warned transport and logistics firms of a shadow that can fall between senior people concerned that legal risks be tackled systematically and those sections of the business most in peril.

In a commentary aimed at larger companies, lawyers Randal Dennings and Wei-Loong Chen say that stakeholders, and boards in particular, are seeking "greater assurance regarding legal risks, and that governance, risk and compliance (GRC) matters concerning the organisation are being addressed in an integrated and proactive manner".

"Organisations understandably have also focused their resources and corporate attention on those areas of their business which potentially create the largest legal and regulatory exposure," the lawyers say.

"In the transport and logistics industry, these areas are typically occupational health and safety, environment, employee relations, and competition law.

"In some organisations, these matters are the responsibility of specialist, standalone business functions.

"While this approach has its strengths, the limitation of this approach is that it may result in, amongst other things, a disconnect between the GRC functions themselves and their interaction with the organisation's business units, and also a lack of a co-ordinated, consistent approach to addressing these issues."

They advise companies to develop a legal risk management program that would ensure the business is "doing the right thing having regard to its organisational goals" rather than simply not doing the wrong thing.

While compliance is a management area that has gained grudging acceptance, the concept of GRC is relatively recent, the authors note.

On the pro-active side, they advise companies "identify legal requirements, identify and assess key legal risks and put in place policies, processes and controls to ensure that the organisation can detect and check that the organisation is effectively discharging its legal requirements".

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