National Security-Driven Regulatory Disruption: What General Counsels Need to Look Out For
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31 mars 2025
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Though we often associate regulatory shifts with increased oversight, deregulation can be just as complex for general counsels (“GCs”). Less regulation doesn’t mean less risk; it often means businesses must navigate greater uncertainty, shifting expectations and evolving legal landscapes. Take the differing signals coming from governments in the United States and the UK. Whilst we have seen the UK focus on deregulation as a method for growth, innovation and cutting red tape,1 we are seeing the United States take a more multifaceted approach to promote economic and national security2,3,4 — particularly when it comes to areas such as artificial intelligence (“AI”), cryptocurrency, competition and supply chains.
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The United States has pledged to become the global leader in cryptocurrencies, rolling out new regulations to attract investment,5 whilst the Committee on Foreign Investment in the United States (“CFIUS”) continues to apply new authorities to scrutinize deals in emerging technologies.6 These developments underscore a broader trend where national security is becoming a central political theme garnering prominent consideration in regulatory enforcement, rather than treated as a separate and distinct area of focus.
Given this fragmented regulatory-deregulatory environment, what are GCs to do? They must go beyond ensuring compliance and act as strategic risk managers, helping their companies navigate shifting policies while aligning risk mitigation with core business strategy.
Fragmented Cross-Border Regulations Brings Heightened Risks
Where national security concerns influence regulatory frameworks across industries, GCs must anticipate risks before they become liabilities by overlaying their assessments with analysis of geopolitical currents that are driving policy changes. This is even more critical in a fragmented cross-border regulatory environment where uncertainty increases exponentially with varying scales of enforcement and implications to business operations depending on where you operate.
A deregulated environment may transfer even more responsibility onto businesses themselves, increasing exposure to litigation, reputational damage and investor scrutiny. GCs must ensure compliance across different legal landscapes, while anticipate risks and have mitigation strategies in place avoid adverse impact that would hinder or derail their operations in a particular jurisdiction.
Getting Ahead
When GCs focus on aligning risk management with broader corporate strategy, they are able to be proactive rather than reactive when it comes to overarching direction-setting — putting the right stakeholders in place to implement an actionable risk mitigation plan. Instead of treating compliance and risk management as disparate functions, GCs should work closely with leadership teams to embed comprehensive mitigation considerations into decision-making processes. In the national security-driven regulatory context, this means conducting regular political and regulatory impact assessments to business operations, proactively implement enhanced pre-deal due diligence that includes actions such as political and regulatory risks analysis, risk mitigation planning, strategic communication campaigns, and structure deal transactions with national security frameworks in mind and ensuring that supply chain integrity is not impacted by regulatory actions such as export controls and sanctions.
Most importantly, early engagement with regulators is critical for establishing productive relationships before a ‘bet-the-company’ need arises. Allowing a potentially adverse regulatory issue to escalate without a plan to address it is a high-risk strategy. As a risk management strategy, GCs should work with company leadership to actively map out stakeholders, build relationships, effectively position the company’s role within the industry, and participate in industry discussions to be more in control to shape policy outcomes.
Final Thoughts
In this era of national security-driven regulatory disruption, GCs must serve as strategic risk navigators, guiding their organizations to anticipate, adapt and thrive amid constant change and through fragmented frameworks. Though the challenge is significant, so is the opportunity. Companies that understand and can translate the political will into business implications, proactively manage geopolitical risks and engage with regulators, and integrate an enterprise risk mindset with corporate strategy formation will emerge stronger – with GCs as trusted advisors who are not just protecting the business but enabling its sustained growth.
Footnotes:
1: “Regulator axed as red tape is slashed to boost growth,” GOV.UK (March 11, 2025)
2: Evan T Abrams and Brian J Fleming “The Trump Administration's AI Agenda: What It Means For National Security,” Steptoe (February 28, 2025)
3: “Moolenaar, Krishnamoorthi Call For Tightening Export Controls on Chips Critical to China's AI Platform DeepSeek and Other Measures to Address its Risks to Americans’ Data and Security,” The Select Committee on the CCP (January 30, 2025)
4: David Kappos, Evan Norris and Sasha Rosenthal-Larrea, “Early Trump AI Moves Come in a Complex Regulatory Landscape,” Bloomberg Law (February 20, 2025)
5: Hannah Lang and Trevor Hunnicutt, “Trump orders crypto working group to draft new regulations, explore national stockpile,” Reuters (January 24, 2025)
6: “Fact Sheet: President Donald J. Trump Encourages Foreign Investment While Protecting National Security,” The White House (February 21, 2025)
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Date
31 mars 2025
Contacts
Senior Managing Director