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Legal sector to have fewer risk managers in 2020

Senior managers’ skills set to include contract management 

9 December 2013

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By Manju Manglani, Editor (@ManjuManglani)

There will be fewer and more senior risk professionals in the legal sector in 2020, the head of risk at the world’s highest-grossing law firm told Managing Partner’s 10th annual Risk Management for Law Firms conference last week.

DLA Piper’s chief risk officer, Julia Graham, also said that existing risk managers will need to gain new skills such as contract management to procure IT solutions for risk management as well as cloud solutions.

Reflecting on how enterprise risk management has changed in law firms since her 2006 conference presentation on the same subject, Graham said the biggest change has been the shift in focus from operational risk to organisational risk.

Operational risk is the easy part, she said, as these risks are often insurable and listed in the risk register; they are the risks which clients expect firms to have covered. It is organisational risk that keeps boards up at night, she said.

“The first line of defence in risk management is risk ownership and internal controls; the second is the risk management and compliance department; the third is internal audits; the fourth is external audits,” said Graham.

“I would add a fifth and sixth to these – fifth the regulator, sixth your clients.”

Graham said that firms previously focused risk management efforts on managing buildings, IT and business continuity but have since moved on to focus on organisational risk, particularly leadership and culture, due to recent failures in the financial services sector.

By way of example, she noted that DLA Piper’s insurance renewal proposal in 2006 focused on operational risk, but these risks were hardly mentioned in its 2013 proposals.

Complexity and the increasing connectivity of risks are creating further challenges for law firm risk managers, Graham continued.

The speed of response to risk is crucial, she said, warning that a reputation that has taken years to build could be destroyed in a minute.

Graham said she expected the talent pool for law firm risk managers to remain limited, but that there would be greater gender diversity in future.  

 

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