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“Opportunity is missed by most people because it is dressed in overalls and looks like work” – Thomas Edison
Have you ever been overwhelmed by conduct-related activity in your business? Or have you managed to escape it so far, but you know it’s on its way? Perhaps you’re having trouble helping your internal clients focus their attention on conduct issues and how the organisation might respond to them?
Just five years ago, discussion about “conduct” as an issue in Australia didn’t register on the risk radar any more than other “compliance” or social responsibility issues; now it’s a serious form of regulatory disruption that isn’t likely to recede. Whilst the banking sector has been conduct’s ground zero, there is no doubt that these issues are moving into adjacent spaces, including insurance, retail, manufacturing, and government.
Business and government won’t get conduct “right” unless they spend adequate time to consider what good conduct means for their business, and take steps to consider whether their people, process and governance arrangements result in fair and suitable outcomes for customers, employees, suppliers, and markets.
But, more importantly, they need to elevate the customer and other stakeholders in their decision-making, and be prepared to challenge their business as usual approach. To see conduct as solely being risk to the reputation of a business narrows down the focus and ignores the heart of the issue: that the game has changed, and this is about outcomes for stakeholders other than the institution. To change the game, we need to change perspective: to see things from another’s point of view, and ask whether our organisations genuinely and consistently achieves fair and sustainable outcomes for key stakeholders.
The in-house legal team is uniquely positioned to be a leading voice for the business in relation to conduct; lawyers are trained to understand many different “sides” of a situation, and often have a strong sense of what outcomes are fair. But getting traction or interest in an organisation can be challenging when there are so many competing and increasing demands for limited human and financial resources, and so many other threats may seem more imminent.
So, how can the legal team work to secure the right amount of focus on conduct, particularly when conduct issues may not have emerged as a major threat in your business, or perhaps even your industry? How can you convince senior management who believe that they are acting ethically, and are not at risk from a conduct-driven problem? Or who believe conduct risk is not a threat to the organisation at all?
There are some key strategies available to legal teams, potentially working with risk and compliance, to bring conduct risk issues to the front of mind in the business:
Most importantly, striving for great conduct can be a positive story. Instead of focusing just on what could go wrong, why not focus on what could go right? CEOs and Boards that see conduct as an opportunity to improve their customer focus, reinforce the ethical and empathetic culture within their organisations, and to make the pursuit and retention of trust a major priority, will most likely do better than those motivated by the need just to manage a risk.
Conduct is both a threat, and a major opportunity. As in-house Counsel, it’s worth being the optimist, and selling your vision of the impact a great conduct story can have on the organisation, and its customers, staff, suppliers, and the market as a whole.