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ADVERTISMENT my expertise can be equally or more until you’re certain those policies and necessary resources and expertise to The case for valuable to them in a proactive capacity. procedures are fully implemented. You analyze the gravity of its risk. The CRO needs a realistic budget, qualified staf I am regularly called on to help my cli- need to put controls in place to ensure ents identify possible areas of exposure lyze risk thoroughly and implement followed properly in the course of busi- and assist them with the development of that polices are understood, are being and access to external advisors to ana- proactive risk them into opportunities, which can cre- in case changes are needed. cuts on important areas of risk or if your plans that mitigate those risks, and turn ness and are being reviewed periodically adequate programs. If you take short- eforts are only superficial, you’re wast- ate a real competitive advantage. Another major pitfall can occur when ing your money because the regulators a company with a serious risk addresses management So, how can companies turn risks it merely with a written policy or webinar and opposing counsel in litigation will into opportunities? see right through it. without the benefit of in-person train- You also need to be sure you have the For example, a company may perceive ing. Businesses have started moving to By PaBlo Fuchs that there is a certain regulatory compli- ance exposure. Instead of just sending a less expensive training options, such as appropriate information flowing to the memo to employees, the company could invite representatives from the regulator A cost-effective program not only mitigates risk being examined and the behaviours “ I am regularly called on to help my clients to speak to their staf about the issues — it creates a competitive advantage. being monitored. That works well for a identify possible areas of exposure and few reasons. First, it really sensitizes peo- assist them with the development of plans ple to the particular regulatory concern that mitigate those risks and turn them because they’re hearing it directly from into opportunities which can create a real What should a company do to miti- the source. It rings far better and has competitive advantage. Proactive risk management is an expensive endeavour. gate these risks? more impact than watching a webinar ” The costs associated with hiring specialized staf, setting up robust com- Many large Canadian companies have or getting a bulletin. Second, it also pro- pliance programs and monitoring risk-related activities add up quickly. But already developed formal risk-manage- motes a better relationship between the there can be a real return on investment with an efective risk management ment functions, appointed a dedicated company and the regulator. The regula- online training and webinars, but those board level. The board members need program that serves to avoid the even heftier price associated with putting Chief Risk or Chief Risk Management tor’s impression will be, “This company can be just background noise to most to understand and follow which issues out fires, defending ongoing litigation and trying to overcome reputational Ofcer (CRO or CRMO), incorporated takes us seriously — so much so that employees who may be reading other have heated up and need immediate more pronounced risk management they want us to talk to them.” So, if you material, doing their daily work or eating or long-term attention. They need to damage when things go wrong. responsibilities into all of their C-level encounter a problem with that regulator lunch while watching. It’s not nearly as be sure they are getting the informa- Ellen Bessner, a senior litigation partner in the Toronto ofce jobs (including the position of General down the road, they will perceive you as impactful as an in-person presentation tion necessary to make decisions and of Cassels Brock and author of the bestselling book Advisor at Counsel) and put a risk heat map in place a well-intended partner and your situa- that’s interactive and permits discussion understand how the risk may impact Risk, has spent almost 25 years assisting companies, particu- in order to identify the risks that are most, tion may result in a better outcome. and questions. the company. What protocols have larly securities dealers and public issuers, in defending litiga- or least, likely to occur. The degree of Our law firm wants to know as much Other major problems can arise when been put in place? Have they been tion and regulatory matters. She also works with her clients to ‘heat’ for any risk fluctuates depending as possible about the inner workings a company isn’t following its prescribed tested? How are they being managed? proactively identify legal and business risk and to assist with on the business activities, the legal envi- of the regulators that can significantly internal disciplinary measures. Are your Are they proving to be efective? development of cost-efective risk management programs. ronment and market conditions, among impact our clients and develop relation- senior management and board mem- Finally, the laws are always changing, Ellen Bessner We asked Ms. Bessner to share her thoughts on the chang- other things. So, it’s very important for ships with the regulators to positively bers really committed to overcoming and that risk heat map you developed Senior litigation partner ing risk-management environment and how companies can all companies to identify the areas where impact its clients. It is important for a particular identified risk? Is there a yesterday may be completely diferent cassels Brock they are most vulnerable and realize that companies to partner with lawyers and clear message from the top-down; and today. The CRO has a big job and needs best mitigate the risks they face: those areas of vulnerability need moni- other professionals who understand is there confidence from the bottom- a solid plan to ensure that there aren’t toring as they change over time. their clients’ risk and have the expertise up with assurance that there will be no too many sleepless nights. n We’re living in a new world when it quickly and broadly; and once informa- Assembling a team of trusted advi- to reduce that risk. reprisals for employees who speak out? comes to risk management. What tion is posted, even if it’s inaccurate, it’s sors outside of your organization, includ- To send a clear message, the company are the most prominent risks com- there permanently. The online environ- ing lawyers, accountants and industry What are the most common pitfalls needs to be seen disciplining anyone panies face now and how are they ment has significantly increased the experts, ofers a critical means of sup- companies fall into, or what major who doesn’t follow procedures or who different than in the past? chances of computer security breaches port for your company’s risk manage- mistake do they make, when it breaches internal requirements. There are more risks today than in the and business interruptions, it has intro- ment infrastructure. As a litigator, I am comes to risk management? past; in addition to operational, finan- duced social media risks and provided often retained to put out fires by defend- The biggest mistakes I have seen com- What can companies do to ensure cial, compliance, legal, and regulatory plaintif’s counsel with the opportunity to ing litigation (employment and commer- panies make is to hide from a problem or that their corporate counsel and risks that have existed for a long time, troll websites looking for class actions. At cial) or regulatory matters that impact just paper it over. Too often when a com- other senior risk officers do the the damage is more severe due to the the end of the day, these risks impact a the reputation of companies and indi- pany identifies a risk, it develops a policy, best job possible? impact of the internet and globalization. company’s reputation and cause serious viduals (i.e. insider trading allegations); distributes it to employees and considers First, the board of directors needs The internet allows information to spread reputational damage. but my clients have come to realize that the job done. But the job really isn’t done to ensure that the company has the CasselsBrock_DPS_0612_E.indd 2-3 12-06-06 12:45 PM