The Zurich way: a (legal) future between AI and ESG

Last September, Zurich appointed Katja Roth Pellanda as new Group General Counsel to lead the legal team. She joined Zurich from Novartis as Deputy Group General Counsel in April. Pellanda succeeded Yannick Hausmann, after 12 years in that role. Her appointment comes amid a company transformation, with clear objectives. Till now the projects she’s involved in seem not to disappoint these expectations. From AI to ESG, going through D&I, Pellanda tells how she’s reshaping the role of legal within the company…

Your appointment came amid the pandemic. What are the main legal implications of the current COVID-19 crisis?
COVID-19 raised some immediate challenges for us and our customers. For instance, we had to assure data protection due to remote working, manage COVID-19 litigations and adapt our legal assessments to constantly changing restrictions and regulations. But we are also planning for a post-pandemic world. Life will not go back to how it was in 2019 and so there is a need to transform our work and our function. Much of the transformation we’re seeing is positive, such as the introduction of flexible working patterns, an increased focus on employee wellbeing and a greater use of digital technologies.

What are the main challenges your team is facing?
Digitalization and AI are two big areas of focus. These new technologies provide an opportunity to optimize our legal function and roles. For example, we are piloting an AI tool to help us identify new laws and regulations across our global jurisdictions. This is currently undertaken manually, but if it was automated then our team can focus on the more strategic aspects of our roles.

More particularly, what do you find most interesting among the current challenges in the insurance industry?
I am very passionate about Zurich’s purpose to protect people from risk and to create a brighter future for everyone. I am also stirred by the rapid changes within the insurance industry driven by new digital technologies and evolving customer expectations. It is exciting to see Zurich proactively respond with its investments and innovations that are delivering new products and services into new markets through new digital channels.

What’s the role of legal in sustainability and ESG?
Environmental challenges, social unrest and heightened customer needs have shifted public expectations and amplified the importance of ESG. There is growing consensus that companies must play an increased role in solving the problems of our society and the planet. This pre-existing trend is being accelerated by the current global recession and pandemic and it is clear ESG cannot be outsourced to governments and politicians alone.

Indeed, you create an ESG legal team…

Correct. ESG is close to my heart and after my appointment as Zurich’s Group General Counsel, I established an ESG legal team to deal with the day-to-day work in this area, such as dealing with the non-financial disclosures in our reporting, setting up a robust ESG governance or to ensure adequate ESG due diligence strategies in our third-party transactions. I also created a global project team to look at how our legal function can contribute with own initiatives towards Zurich’s ambition to become one of the world’s most responsible and impactful businesses.

Are climate risks a key part of your remit?
Climate risks are top of our ESG agenda. There are short- and long-term ‘physical risks’, such as an increase in the frequency and severity of severe weather or sea level rise. There are also ‘transition risks’ linked to the transformation towards a low carbon economy. Companies need to embed these climate risk considerations in business-as-usual risk processes. As an insurer, this means they must be considered in our underwriting and investment decisions.

And what’s the role of legal in boosting D&I within the organization?
D&I is an important principle of justice, ethics and equality, and therefore closely connected to the role of legal. There is still room for improvement on D&I in the legal profession and Zurich has included D&I aspects in our criteria for selecting external law firms. Besides these obvious steps, there are more subtle ways to encourage D&I, such as a flat hierarchical culture that fosters natural respect for each other, equal access, and exposure to information regardless of language and relevance. Diversity of backgrounds and cultures strengthens every team.

So, general counsels have to deal with increasing responsibilities. How do you think their role has evolved throughout the years?
Previously, the role of General Counsel was rather narrow, reactive and focused on telling the business about what it cannot do. Thankfully, this has changed. Today General Counsel is expected to contribute to a company’s strategic objectives and positively impact business results. This requires not only having an in-depth knowledge of the legal landscape but also an ability to foresee challenges and provide early guidance. General Counsel and the legal function also play a greater role mitigating risks that could impact a company’s reputation, particularly if it could result in regulatory intervention, litigation or if targeted by interest groups. Within Zurich, another very important role is to cultivate a culture of empowerment, collaboration, transparency and trust to allow the legal function to grow and develop across all regions.

What functions you feel will collaborate more and more with the legal function?
This is hard to say as we advise all functions within Zurich, but I believe the interaction with the ESG function and HR will grow. Legal also plays an important role in advising our new Global Business Platforms unit, which is focused on new digital customer services, and our LiveWell business that is accelerating Zurich’s existing health and wellbeing initiatives in markets around the world.

Is there a project you’re working on you would like to point out?
I’m working on many projects, but most important to me are those that impact our collaborations and focus on building a brighter future together. We have created four global focus groups in the legal function’s most important development areas – ESG, Smart Risk Taking, Technology & Innovation and Development & Growth. The idea behind these groups is to offer everyone within the legal function the possibility to get engaged and shape our future together as one team.

The interview was published on MAG 159 (download here for free)