Risky business

Hedley May has a specialist focus around senior Legal, Compliance, Company Secretary, Internal Audit, Executive Reward and Risk appointments, working with a number of the world’s leading corporates, financial institutions, regulatory bodies and professional services firms to assist them in attracting and retaining the highest quality individuals to lead their business critical corporate functions.

Hedley May’s consultants discuss how the increased focus on risk and governance has impacted regulatory roles such as the General Counsel, Company Secretary and Internal Auditor.

Nick Hedley

Nick is one of the founders of Hedley May. He is a recognised leader in the inhouse Legal, Risk, Company Secretarial, Compliance and Internal Audit markets and has worked for a broad spectrum of corporates and fi nancial institutions.

Verity Smith

Verity is a Consultant at Hedley May. Her focus is on senior functional appointments for fi nancial services and corporate clients with a specialism in Internal Audit, Risk Management and Compliance.

Harry Chetwynd-Talbote

Harry is a Consultant at Hedley May. He has particular expertise in Legal, Compliance and Company Secretary roles and works with major banks and other fi nancial institutions, as well as a range of FTSE 100 clients.


How have things changed for regulatory roles within organisations?


How have things changed for regulatory roles within organisations?


How have audit roles been affected by the increased focus on governance?

Nick: The financial crisis resulted in Boards of all publicly-listed companies having a much stronger focus on risk.

Shareholders, and the wider public, have put a huge emphasis on Boards, with an expectation that these 8-12 individuals know everything that is going on in the organisation. Boards themselves therefore feel an obligation to have a keener knowledge and understanding of what is happening in their companies.

To assist with this, roles such as General Counsel, Internal Auditor and Chief Risk Offi cer have been elevated and are getting much more exposure at Board level.

Typically if they weren’t reporting to the CEO previously, they are now, and if they weren’t on the Executive Committee, they are now. With that comes pay rises, more resources and greater internal influence.

Harry: It really is in the public eye. Every time Vince Cable writes a letter to a FTSE company about Board composition it will be covered in the newspapers. Governance used to be behind the scenes, but now the press and the public have become stakeholders in good governance and it’s become newsworthy.

Verity: While it is exciting for the reasons Nick has explained, it puts a very different emphasis on personal indemnity. The attractiveness of these roles has changed. They have become particularly stressful to fulfi l, which casts a very different light on the skills we are looking for in the people who will succeed in these roles. For all functions elevated in such a short period of time, the requirement of these individuals to have softer skills, such as; infl uencing, relationship-building and communicating, is critical and not something that the functions have necessarily generated before.

Nick: In the last fi ve years the focus has been around risk management, but now the shareholder conversation is shifting towards growth. And once Boards start thinking about increasing their Return on Equity, or how they are going to grow their business, that’s the moment that life becomes a bit more challenging for the General Counsel or Chief Risk Offi cer. But, as Verity mentioned, communication skills are essential to get the message heard and to ensure the risk agenda stays relevant.

Harry: There is a lot of activity on the Company Secretary side of things. There have been several elements that have driven this. The most visible driver is the huge amount of IPOs in the last six months, which, of course, creates a regulatory requirement for a Company Secretary. Between 2009 and 2013 there was very little fl otation activity.

More broadly though, Boards are looking closely at the increasingly important and visible role the Company Secretary plays, and deciding they need to upgrade the calibre of individual in that role. As a result, often the General Counsel will become the Company Secretary.

Roughly half of these roles are combined across the FTSE 100; and in the FTSE 250 the majority of the Company Secretary/ General Counsel roles are combined.

Nick: In Financial Services companies, there is an increasing trend to split the roles – less so in non-FS organisations. The FTSE 30 also has a tendency to split them because the Company Secretary is a big role in its own right.

In terms of the individuals fi lling these posts, there is a trend for lawyers to be hired for the role of Company Secretary – rather than ICSA professionals. All of which points to the role becoming more important in organisations.

Harry: Exactly. The Company Secretary being seen and not heard in their capacity as minute taker is no longer the case in this governance focused environment. The company secretary needs to be someone to infl uence and act as a guardian of the governance agenda.

Furthermore, the Board often relies on the Company Secretary to facilitate the relationship between the Executives and the Non-Executives, working independently but adeptly. And if they are solely admin, it is likely that they will struggle to have the impact. General Counsel are typically better at this, which is why the role is often combined.

Verity: The increased expectation from shareholders and the pressure on the Board to have a grasp on assurance is now so important in an organisation that it has been a key driver behind the internal audit upgrade. Broadly in the FTSE this increased requirement from the Board means that internal audit now has an elevated role providing independent assurance spanning the entire organisation. That means the internal auditor has to be able to go out into the business and communicate and build relationships. This allows for auditors to both report issues back up to the Board and help that business address issues before they arise, which in turn means fewer concerns have to be elevated up.