Technology risk has become the number one concern for general counsel and board directors, according to a major UK survey.

The poll of 160 general counsel and directors, which was conducted by professional network Winmark and Clyde & Co from January to March, shows that technology risk had moved to the top of boardroom agendas even before the full force of the Covid-19 pandemic struck.

Asked to identify the top risks they faced, the majority of both directors and GCs put technology first — moving it ahead of political risk, which was the top 2019 risk.

For GCs, the next most important risks were organisational, political, and reputational — while directors placed more weight on political risk, making it their number two concern, with reputational and then organisational risks at three and four.

Follow-on research found that respondents felt their organisations were responding well to the technological challenges posed by the pandemic and its requirement for ramped up remote working.

One general counsel said he was “impressed with the rapid adoption of technology” while another added that the ability to “work virtually and in an efficient, paperless manner has been emphasised”.

But the same optimism didn’t apply when it came to adopting technology for their teams. Fifty-nine per cent of GC respondents noted difficulties in getting budget approvals, 52% found it hard to prioritise which technology to use and 41% struggled with implementing technology within their teams.

The report found the in-house legal community had been ‘slow to develop its use of innovative technology – budgets remain tight and false economies of under-investment are holding back many legal functions’.

Peter Hirst, senior partner of Clyde & Co, praised the ability of organisations to rapidly adapt to the Covid-19 pandemic by shifting to remote working models and adopting new technologies. 

He added: “Risk management and mitigation must remain central considerations for boards and their general counsel as they seek to address the longer-term challenges and opportunities the pandemic has presented them with."

The survey also suggested that organisational risk remained a concern, especially issues relating to people management, staff well-being and mental health; all of which have been exacerbated by remote working. 

Meanwhile, political risk is being fuelled by the attendant uncertainties of rapidly changing government policies and trade tensions between the US and China, and the UK and the EU, as well as state responses to Covid-19 including strong intervention in markets through emergency laws.

Almost two-thirds (64%) of the GCs ranked the commercial risks of supply chain management as the top factor driving change in their role, given changing trade preferences and increased public health concerns. 

Concerns such as globalisation, complex and digitised supply chains, AI and automation have been given extra relevance by the pandemic. 

The perception of environmental risks, by contrast, was muted, which Hirst said was surprising, noting that: “Climate change is a significant risk in the short, medium and long term”. 

GCs are keen to play a part in steering long-term recovery, but boards are less certain of their role. Risk assessment and horizon-scanning were seen as important by 80% and 91% of GCs respectively; but only 40% and 50% of boards agreed.

Hirst concluded: “There is still a lack of alignment around how focused GCs should be on proactively assessing future risks.” 

He argued that proper risk management required “an integrated, multifaceted operational structure that should include the voice of a commercially aware GC at its heart".