Governance in Global Operations: Legal and Board Risk Across Borders

“The most dangerous risk is the one you didn’t know you were taking.”

As multinational corporations expand their global footprint, many boards presume their governance frameworks travel seamlessly along with their products and services. But legal systems don’t globalize the way supply chains do and oversight mechanisms doesn’t scale just because operations do.

Today, a single decision in a New York boardroom can trigger legal exposure in São Paulo, regulatory scrutiny in Brussels, and reputational damage in Southeast Asia. And yet, many U.S.-based Directors and General Counsels continue to approach governance and international oversight with frameworks designed for Delaware, not Dubai.

The consequence? A widening governance gap between what boards are held accountable for and what they can realistically see and control.

This article explores the silent, yet high-stakes risks lurking in global operations: fractured labor laws that convert routine layoffs into costly liabilities; third-party intermediaries operating in legal gray zones; rapidly evolving trade restrictions shifting with geopolitical winds; and regulatory fragmentation that makes compliance a moving target. These are n0t future risks, they are current realities that are reshaping how governance must function at scale.

Drawing from my experience leading governance, legal, and compliance strategies across over 50 countries and multibillion-dollar business units, this article offers a pragmatic perspective on how global complexities disrupt traditional governance models and what U.S.-based boards and legal executives must change to stay ahead.

Because in today’s environment, where enforcement is global, yet risk is distinctly local, governance that does not adapt inevitably fails.

A. The hidden governance risks no one talks about…until it’s too late.

Global expansion is often framed as opportunity: new markets, rapid growth, and greater scale. But behind the surface of cross-border deals and multinational success lies a far less glamorous reality: governance risk metastasizes silently and unchecked, often most companies are unprepared for the complexity they create.

Let’s explore four critical risks that boards frequently underestimate, often with costly consequences.

1. Employment law isn’t global, but exposure is.

In the U.S., employment law offers flexibility. Elsewhere, it can be a fortress of restrictions. In Brazil, employee terminations require documented cause, judicial validation, and negotiated severance. In France or Germany, mass layoffs mandate consultations with works councils and labor inspectors. In India, the Industrial Disputes Act 1947 requires organizations with over 100 workers to obtain government approval before retrenchments, with potential fines or criminal liabilities for noncompliance. Employees wrongfully terminated can challenge their dismissal in labor courts, seek reinstatement, back wages, and compensation, and employers may face fines or even criminal liabilities (Indian Kanoon summary of Section 25N; NatLawReview overview of retrenchment law). Boards rarely hear about these dynamics until it’s too late; often after reputational damage, legal challenges, or regulatory interventions have taken hold.

Thought to consider: Does your global workforce report offer a clear, risk-adjusted picture, or just a spreadsheet of optimistic numbers?

2. Your riskiest employees don’t work for you.

The highest-risk individuals in global operations often sit outside the organization: agents, brokers, local consultants, and joint venture partners. They wear your brand, represent your interests, and operate in legal gray zones. But in the boardroom, they are usually discussed, if at all, as procurement line items.

Third-party risk is the most frequent vector for enforcement action. Over 90% of Foreign Corrupt Practices Act (FCPA) cases involve misconduct by intermediaries, not internal employees (NAVEX). Airbus’s $3.9 billion settlement offers a stark reminder of what can go wrong when oversight stops at onboarding (DOJ Press Release).

Thought to consider: What do you really know about your partners selling your products and services in Lagos, Jakarta, or Almaty?

3. Trade compliance is the new geopolitical chessboard.

Export controls and sanctions are no longer just a technical obligation; they are a strategic necessity. A product that was legally exported last quarter may now trigger enforcement risk. Regulatory shifts are driven by geopolitics, not logic, often changing overnight.

The U.S. Department of Commerce’s 2022 semiconductor export controls against China went far beyond simple regulatory development, they were a geopolitical rupture that reshaped the legal and commercial viability of entire technology supply chains. Issued by the Bureau of Industry and Security, these controls barred the export of advanced computing chips and semiconductor-manufacturing equipment, especially those destined for supercomputers or military end-uses, and expanded U.S. export jurisdiction to foreign-made products containing U.S. technology; effectively pulling multinational firms into the scope of U.S. enforcement, even if they operated entirely outside the U.S. (U.S. Federal Register: Implementation of Additional Export Controls).

Simultaneously, the U.S. Treasury Department’s sanctions, targeting dozens of Chinese firms with alleged ties to China’s military-industrial complex, have further restricted financial flows, banned certain U.S. investments, and triggered secondary compliance risks for non-U.S. entities with indirect exposure. Firms suddenly found long-standing business partners reclassified as “blocked persons,” leaving them scrambling to unwind deals, revise due diligence protocols, and mitigate reputational fallout. For global boards and general counsel, these actions have made it clear: geopolitical intent can translate overnight into operational illegality (Treasury China Sanctions).

Adding to the complexity, escalating tariff regime, such as those imposed by the U.S. on Chinese steel, solar panels, and electric vehicles, are also redrawing the global trade map. Tariffs, while technically distinct from export controls, create parallel risk by redefining cost structures, sourcing strategies, and market access in real time. For governance teams, this means legal exposure must be tracked alongside economic friction, especially as retaliatory tariffs and countermeasures become common tools of geopolitical negotiation.

Thought to consider: Is your board proactively tracking geopolitical trends or simply reacting to headlines?

4. Local regulation, global consequences.

One of the greatest paradoxes of global operations is this: regulatory risk is local, but in a digital world, the consequences quickly become global. Social media, international journalism, and online investor platforms ensure that what used to be a local incident is now a corporate crisis with global reach.

A data breach in Germany may trigger GDPR enforcement, class-action lawsuits in the U.S., and reputational loss in Asia. A bribery incident in Africa can prompt Security Exchange Commission investigations and significant stock market losses. Regulators increasingly collaborate across borders: sharing data, aligning investigations, and escalating risk exposure (OECD Anti-Bribery Report; Transparency International Trends).

Consider JBS, the world’s largest meat processor. What began as a bribery investigation tied to Brazil’s Car Wash probe quickly exploded into a global scandal. In 2017, its parent, J&F Investimentos, in Brazil’s Car Wash corruption probe, reached a leniency agreement admitting to paying more than $150 million in bribes to over 1,800 officials. The scandal triggered a sweeping R$10.3 billion (approx. USD$3.2 billion) fine and spawned parallel U.S. investigations. The plea deal carried consequences far beyond Brazil’s borders: U.S. media and investor forums exploded with coverage, JBS’s reputation was scrutinized by international ESG analysts, and its eventual U.S. dual listing faced major shareholder and regulatory pushback (Reuters).

Thought to consider: Does your board hear about critical compliance issues from internal channels or from social media news outlets, such as X (formerly Twitter), Bloomberg, or the Wall Street Journal?

B. Rethinking oversight: what U.S.-based Boards and General Counsels must do differently.

The greatest governance failure in global operations is not a scandal; it’s stagnation. Too many boards still govern global risk through the lens of its headquarters, mistakenly assuming what works in the U.S. will automatically scale in Taipei, São Paulo, or New Delhi. It does not.

Effective global oversight require transformation, not mere translation. The “copy-paste” model of governance, recycling U.S. frameworks across jurisdictions, is not just outdated; it’s dangerous. It breeds blind spots, stifles local accountability, and collapses under cultural and legal pressure. To govern globally, U.S.-based Boards and General Counsels must embrace structural change that reflects both the diversity of operating environments and the unity of core values.

This article serves as a call to action for senior executives to reimagine global governance strategically and proactively.

1. Design governance that scales with risk, not uniformity.

Global governance is not a replication exercise; it’s a calibration challenge. The most resilient organizations don’t force uniformity across borders; they design principled systems that flex intelligently to local risk conditions. A single global policy may meet ethical standards, but without legal customization, it may fail in practice or worse, provoke regulatory backlash.

Boards must move beyond compliance templates and insist on frameworks that are both ethically consistent and operationally adaptable. That means risk-tiered controls, country-specific implementation guidance, and escalation protocols that reflect enforcement volatility, not just internal bureaucracy. The OECD Guidelines for Multinational Enterprises advocate for this “pragmatic flexibility,” encouraging companies to adapt global standards in ways that respect local nuances and stakeholder expectations.

If your governance model looks the same everywhere, it’s likely failing somewhere.

2. Clarify authority across borders before a crisis hits.

Many multinational structures have all the outward appearances of order: subsidiaries, legal entities, and reporting lines. But beneath the surface, governance accountability is often dangerously diffuse. Who decides under pressure? Who escalates? Who signs off, and who takes responsibility if something goes wrong?

Boards must require that every material foreign subsidiary have a living governance charter, one that defines not just reporting structures, but actual decision rights, fiduciary obligations, and crisis escalation pathways. These charters should be tested against realistic high-risk scenarios, not just filed away.

The NACD’s subsidiary oversight guidance warns that superficial governance structures tend to collapse at the moment they are most needed. Governance cannot be assumed; iut must be actively designed, clarified, and rehearsed, especially in cross-border settings where ambiguity thrives.

Delegating authority without delineating accountability is not decentralization, it’s exposure.

3. Empower legal and compliance as strategic interpreters.

In a world where legal landscapes shift rapidly and enforcement knows no borders, General Counsels can no longer be mere interpreters of statutes; they must become strategic narrators of global risk. They need to guide the board beyond legal technicalities to understand the full ripple effects of regulatory pressure, political shifts, and emerging market expectations.

To do that, legal leaders must have proximity to strategy. They should be embedded early in global planning, not consulted after-the-fact. The 2023 ACC Chief Legal Officer Survey reveals that 77% of Chief Legal Officers now report directly to the Chief  Executive Officer, a recognition that legal complexity is now core to business risk, not peripheral. Legal functions should lead, not lag, risk interpretation at the board level.

This is not about more red tape. It’s about making complexity comprehensible; turning fragmented international developments into actionable intelligence for fiduciaries. Boards must empower their legal and compliance leaders to challenge, forecast, and frame, not just approve or block.

Boards should not just ask, “Is it legal?” but rather, “What does this risk mean for our future?”

4. Insist on connected risk intelligence.

Today’s most serious governance threats do not emerge in isolation; they emerge at the intersection of systems and silos. A local labor protest becomes an ESG story. A cybersecurity breach triggers privacy, reputational, and supply chain consequences. Regulatory issues in one country can trigger enforcement actions across in others. Yet, most boards still receive risk information in functional fragments, expected to piece together the picture on their own.

Boards must demand integrated, cross-functional risk dashboards that connect internal controls to external exposures and qualitative insights to quantitative thresholds. The World Economic Forum’s Global Risk Report reports that converging global threats require integrated oversight, not siloed governance.

If your board’s risk map does not connect the dots, it’s not a map; it’s a liability.

C. Global integrity is a strategic asset.

Effective global governance is not just about avoiding fines or managing regulatory checklists. It’s about preserving and enhancing strategic agility, brand equity, and investor trust. In today’s world, where capital is mobile but legal accountability remains local, a governance model that fails to evolve quickly becomes a serious liability.

Boards that get this right do more than mitigate risks; the create distinctive, lasting value. Companies that govern with nuance, insight, and integrity across multiple jurisdictions will consistently outperform those that govern through a lens of uniformity and assumption. General Counsels who translate local complexity into clear, strategic board-level insights will be essential partners, not just for compliance, but for sustainable growth.

This critical moment demands a shift in mindset: governance should not be viewed as a set of constraints, but as a powerful engine driving trust, resilience, and global scale.

Global operations are only as robust as the governance structures behind them.  As regulatory enforcement intensifies, geopolitics intensifies rises, and stakeholder expectations escalate the core question for every board is no longer simply “Are we compliant?” but “Are we in control?”

Companies that can answer this question with confidence, consistency, and credibility across their global footprint, will be the ones that not only survive but thrive in the years ahead.