- 77% of respondents expect the number of disputes to remain the same or increase in 2024.
- Tightening cybersecurity and data privacy (65%) and ESG (61%) regulations are increasing litigation risks for Singapore businesses.
- Employment disputes have also emerged as a major concern, tripling since last year (49% compared to 13% in 2023).
- Only 19% of respondents were fully or very confident in their organization's current level of litigation preparedness.
A growing wave of increased regulatory oversight and enforcement, with cybersecurity and data privacy and environmental, social and governance (ESG) concerns driving the legal challenges facing Singapore's biggest companies, reveals new research from Baker McKenzie. being pushed to the forefront.
Employment disputes have also emerged as a major concern, increasing three times from last year (49% to 13% in 2023) due to regulatory changes and economic factors.
A survey of 150 senior legal and risk leaders from large Singaporean companies with annual revenues of more than $500 million found that 77% of respondents expected the number of disputes to remain the same or increase in 2024. However, almost two-thirds of respondents said that they did. They said external investigations posed a risk to their organization due to cybersecurity and data breaches (65%) and ESG-related disputes (61%).
Nandakumar Poniya, Principal and Head of Asia Pacific Dispute Resolution at Baker McKenzie Wong & Leow, said: We recognize the need to adapt to a dynamic regulatory environment. Critical areas such as cybersecurity and ESG are facing increased scrutiny from regulatory authorities in line with international standards. Additionally, our latest research also reveals a notable spike in employment dispute concerns, influenced by economic factors. Despite these heightened risks, our research reveals:Only 19% said they were completely or very confident in their organization's level of litigation readiness. This suggests that there is room for improvement in preparation. ”
Cybersecurity and data privacy disputes
82% of Singapore respondents are concerned about external investigations in 2024 in general. Disputes over cybersecurity and data privacy are at the top of the list of concerns for external investigations, driven by rising cybersecurity standards, tightening data privacy regulations, and stricter reporting requirements for organizations. This surge reflects the growing complexity of Singapore's digital environment, which ranks as one of the most connected countries in the world.
Among cybersecurity and data privacy-related disputes, more than half of respondents cited business interruption (59%) and external cyberattacks (57%) as the biggest risks to their organizations.
The rapid rise of artificial intelligence (AI) technology is driving economic growth while raising cybersecurity red flags for nation-states. Recognizing AI as the next frontier of the digital economy and with the rise of sophisticated generative AI models raising concerns about potential abuses ranging from malicious cyber-attacks to misinformation, the Singapore government has announced the AI Eco We launched the Singapore National AI Strategy 2.0 in 2023 to strengthen the system.
To address these new threats, the Cyber Security Authority of Singapore (CSA) has proposed amendments to the Cyber Security Act. The proposed changes would expand the jurisdiction of the Cybersecurity Act beyond just critical infrastructure to cover underlying digital infrastructure (such as cloud services and data center providers) and entities with special cybersecurity concerns. Also included. In addition, reporting requirements may be expanded and generally require reporting to regulated entities of incidents that occur on computers under the supplier's control.
Meanwhile, various government and regulatory bodies have issued guidance on the ethical use of AI to companies across industries. This includes initiatives such as Draft GenAI Framework, Model AI Governance Framework, AI Verify, Veritas Toolkit 2.0, and the Advisory Guidelines on Guidelines. Use of personal data in AI recommendation and decision-making systems.
“Our research continues to highlight cybersecurity and data privacy as the top concerns for corporate research,” said Andy Leck, principal and head of intellectual property and technology at Baker McKenzie Wong & Leow. “This trend is likely to continue as the use of technology expands.” A dynamic regulatory environment will emerge, with Singapore businesses having to navigate a patchwork of international regulations and new risks. ”
Environmental, social and governance conflicts
Although not yet reflecting the proliferation of ESG disputes in the West, concerns about ESG compliance are growing in Singapore. Our survey reveals increased pressure on Singapore's business leaders and lawyers, with 76% citing climate change as their top environmental risk and 55% concerned about extreme weather events. This is in line with the recent surge in ESG regulations in Singapore, as well as several global regulations that may impact supply chains across the Asia-Pacific region.
Singapore's central bank and financial regulator, the Monetary Authority of Singapore (MAS), aims to leverage its financial hub status to play a leading role in the region's transition to a low-carbon future. Their push-pull two-pronged approach addresses both sides of the same coin: strengthening the financial sector's resilience to environmental risks and fostering green financial innovation.
The MAS Guidelines on Environmental Risk Management for Banks, Asset Managers and Insurance Companies (ERM), which came into force in June 2022, clarify environmental risk disclosures by financial institutions and guide international organizations such as the Climate-Related Disclosures Task Force. The aim is to align with the framework. (TCFD) and the International Sustainability Standards Board (ISSB) to ensure greater transparency and accountability. Additionally, the Accounting and Corporate Regulatory Authority of Singapore (ACRA) recently announced the introduction of Scope 1 and Scope 2 greenhouse gas emissions (GHG) reporting requirements for large unlisted companies from 2027, which could expand. There is a gender. Scope 3 emissions from 2029.
Richard Allen, Local Director, Dispute Resolution and International Arbitration at Baker McKenzie Wong & Leow, said: “The growing concern surrounding ESG disputes means that today's companies are no longer just concerned about environmental, social and governance concerns. “It's not a problem; it highlights the reality that we operate in a globally interconnected market.” “Although this is a local compliance issue, it is a potential international litigation risk. The growing scope of ESG disputes that cut across transition challenges, human rights, and social responsibility means that policies and reporting practices continue to A thorough evaluation and improvement is necessary.”
employment dispute
Employment-related disputes are emerging as a significant risk. The increase in risk in the Asia-Pacific region can be attributed to three major developments: (i) Reorganization or Reorganization Activities. (ii) changes or developments in anti-discrimination or harassment laws and increased anti-discrimination or individual rights awareness; (iii) growing awareness of ESG;
Economic headwinds in 2023 are raising concerns about employment disputes. Advance estimates released by Singapore's Ministry of Manpower (MOM) show that job cuts in 2023 will more than double compared to 2022, mainly due to restructuring and reorganization. Following this trend, restructuring/reorganization (40%) and severance agreements (38%) are the top areas of employment disputes for our survey respondents. MOM recently announced that it will develop guidelines on the reasonable use of restrictive trade covenants for terminated employees, with the aim of supporting fair employment practices.
The Singapore government is also actively working to reform the employment landscape through a series of changes to the workplace fairness framework aimed at reinforcing discrimination in the workplace and improving workers' rights. Masu. In February 2023, the Tripartite Commission on Workplace Fairness published interim recommendations on new workplace fairness legislation. After consultation and engagement with stakeholders, the tripartite committee then published a final report, which the government accepted in August 2023. If passed, this legislation would further emphasize the importance of adhering to fair employment practices.
In a competitive job market, there is a growing trend for pay transparency, and calls for fairness and diversity. As pay equity gains global attention, our findings also reflect growing concerns among Singaporean organizations. His 52% of respondents in Singapore expect equal pay and pay transparency to be cited as their biggest employment dispute risk this year.
Celeste Ang, Head of Dispute Resolution and Employment Practice at Baker McKenzie Wong & Leow, said: “Economic headwinds and geopolitical developments have led to an increase in restructuring and restructuring activity in the region, including Singapore. “We will address employment issues arising from the demands of our activities.” Careful planning and care are required, especially in the face of rising trade unionism, government and media attention, and the risk of claims. Aggressive legal counsel and a deep understanding of various legal situations are essential to ensuring compliance and mitigating potential risks associated with employee transfers, notices, and terminations. Another area to look at when it comes to dismissals and other employment-related aspects is the introduction and changes to anti-discrimination and anti-harassment laws in the region. Also of note in Singapore is upcoming workplace fairness legislation. Pay transparency regulations are evolving in Singapore. ”
Prepare for litigation
Despite increased litigation risk, organizations still feel unprepared for litigation. Just 19% of respondents in Singapore said they were completely or very confident in their organization's level of litigation preparedness. This was down from his 25% in 2023. These results demonstrate the changing economic and regulatory landscape and the threats these pose to organizations. So, too, are the increasing demands placed on organizations and their ability to meet them.
Global research reveals that the largest organizations are slightly more confident than their smaller ones. This number was 25% for companies with sales of more than $25 billion, but only 10% for companies with sales of less than $1 billion.
Organizations around the world also lack confidence in finding the right services for litigation and arbitration support. These services typically include document review, legal project management, translation, and transcription. In Singapore, only 7% of respondents were completely or very confident in finding these services, but by 2023, 10% of respondents will have the same level of confidence. Ta.
