As the government prepares to crack down on big business in key areas such as financial responsibility and cybersecurity even further in 2014, general counsel are preparing to beef up risk and compliance to keep up.
Following the lead of J.P. Morgan Chase, which has already announced that it would double its compliance budget in 2014, general counsel are prepared to respond to regulations of financial regulations, cybersecurity and other concerns that are expected to pop up this year. One GC says that he expects that the government’s 2014 actions will follow recent trends.
“We’ve come off three years of an extraordinary amount of rule making,” said Bank of Montreal GC Simon Fish to The Wall Street Journal. “I think we are going into a period of ever more intense scrutiny from shareholders, from the investor community, from regulators and from our customers.”
One of those new rules is the Volcker rule, which creates compliance changes for banks to follow in the hopes of lowering the risk of a 2008-style financial collapse. Along with the new rules come new fines — and if recent bank regulatory fines are any indication, the price of not having an effective risk and compliance program is skyrocketing. However, JPMorgan Chase GC Stephen Cutler believes the government fines are beginning to be too much.
“At what point does this stop?” Cutler said in November 2013. “We should all be concerned, because at a certain point people become immune to the numbers.” He also added that with respect to duplicative regulator behavior, “There has to be a better way to allocate government resources.”
General counsel are also turning an eye towards expected cybersecurity concerns. With LabMD the latest to challenge the Federal Trade Commission’s cybersecurity regulatory authority, many expect the government to beef up its internal cybersecurity regulation standards.
Especially in the wake of the Target hacking scandal, said Amar Sarwal, vice president and chief legal strategist for the Association of Corporate Counsel, to the WSJ, “If you are a company with global operations and any kind of sensitive data, this is top of your list.”
Ultimately, said Clorox GC Laura Stein to the WSJ, the key for general counsel is to anticipate the government’s actions, which makes acting easier later. With respect to privacy in particular, Stein said the key is to focus on “both what is legally required today, and what will be required tomorrow globally.”
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