The Hidden Leverage of a Public Affairs Audit. Why Boards Should Treat Government Affairs Like a Core Business Function

Stefan Borst, Senior Partner Advocacy Strategy

In many boardrooms, Public Affairs (PA) is still regarded as a side activity - an interface with regulators but rarely a driver of value or a corporate risk that should be managed. Yet that view increasingly underestimates the true strategic stakes.

Regulations can reshape entire industries, making or breaking business models. They influence competitive advantage as profoundly as technological innovation or capital allocation. According to a McKinsey study from 2013(!), as much as 30 percent of corporate earnings (EBITDA) across many industries can be affected by government and regulatory actions. In one cited example, a European utility faced a “value at stake” from regulation of around €1.5 billion, equivalent to approximately €30 million per employee tasked with regulatory work. Regulatory pressure since then has multiplied – the financial effect today will be much higher. Thus, well managed Public Affairs delivers a magnitude of leverage boards should no longer afford to ignore.

Yet in practice, many PA functions fall short of their potential. They are underpowered, fragmented, or poorly integrated. Professional PA skills vary considerably. Country offices often commission duplicative studies, issue conflicting policy messages or fail to preserve institutional memory. Internal coordination with Legal, Strategy, or Compliance is inconsistent at best. As a result, headquarters typically intervenes only in crisis mode, while longer-term, smart PA planning remains rare. Most firms still fail to embed regulatory risk and opportunity into their strategic plans.

Measurement is another recurring weakness. Many PA teams report activity metrics - numbers of meetings, submissions filed, or reports produced - but few can draw a clear line to business outcomes, value creation, or risk mitigation. The result: misallocated budgets, diluted influence, and regulatory outcomes that erode competitiveness rather than support it. And on the HR side of things, too many PA departments have a proper upskilling program in place that ensures the level of qualification of their PA teams stays consistently high. 

A Public Affairs Audit addresses exactly these gaps. Modelled on the discipline of financial, risk, or cybersecurity audits, it offers a structured diagnostic of how PA is organized, staffed, integrated, and measured. The audit examines alignment with corporate goals, structural design, process efficiency, capability gaps, technology tools, and performance metrics.

When organizations undertake such an audit, the findings are often eye-opening. Consider a multinational industrial company that discovered three of its European PA offices commissioning almost identical market-access studies - over €1 million in annual spend. Centralizing that research cut costs nearly in half and produced a unified narrative for Brussels and national capitals. While I could not locate a public source that exactly matches this story, it mirrors audit outcomes described by practitioners in the PA advisory sector.

In another example from the pharmaceutical domain, a company recognized that its legislative monitoring to reaction process was too slow. Draft proposals reached local PA teams in time. The monitoring worked. But the internal structure was not fit to do a proper prioritization assessment, craft a positioning or PA strategy and empower the PA team on the ground with the material and data for their advocacy. After reengineering workflows, the team got measurably more successful in influencing amendments - an advantage worth millions. Unilever is frequently cited as an example for a similar exercise in aligning the PA strategy with corporate priorities: by tying its advocacy closely to its sustainability agenda, the company strengthened its capacity to influence environmental regulation while reinforcing its reputation among consumers and ESG-oriented investors.

The economic argument for a PA Audit is compelling. Immediate cost savings emerge through the elimination of redundant studies, overlapping consultancies, tools and mismatched subscriptions. But more powerful are two other levers: risk avoidance and policy influence. By engaging regulatory proposals earlier and more strategically, companies can prevent rules from solidifying in destructive forms. When companies succeed in securing favourable implementation rules, exemptions, or delayed compliance windows, the impact on margins can be considerable. 

Modern campaigns also hinge on technology. Leading PA functions incorporate stakeholder-mapping platforms, AI-based legislative scanning, digital dashboards, and analytics that tie advocacy to business KPIs. Yet many organizations remain stuck in spreadsheets or fractured tool stacks with little adoption. Knowledge all too often resides only in the heads of the experts on the ground – and once they leave, a dangerous gap in advocacy capacity materializes. An audit identifies gaps, redundancies and opportunities for high-leverage tool investments that often “pay for themselves” by boosting alignment and speed.

From the board’s vantage point, the message is simple: PA is the last largely unmanaged corporate risk. You already commission audits of finance, compliance, and cybersecurity because their stakes are existential. Public Affairs merits the same discipline. In fact, the reputational risks often exceed those of other functions. The financial impact is comparable; and the upside is strategically significant. A 2025 Quorum analysis reports that over 60 percent of Fortune 500 executives now view regulatory risk as a top-three corporate concern - but only around 20 percent say their firm has a unified PA strategy. That discrepancy suggests billions in unrealized value.

A Public Affairs Audit is not a luxury. It is a governance tool that enables the board to oversee one of the most consequential levers of corporate value today. Firms that optimize their PA function transform it from a cost center to a strategic engine - one that not only weathers regulatory risk but actively shapes opportunities.

The time to act is now. In an era marked by geopolitical uncertainty, trade friction, climate regulation, digital competition rules, and industrial policy shifts, markets can be redrawn overnight. Boards cannot afford to operate blind. A PA Audit delivers clarity, discipline, and measurable impact. For companies that take it as seriously as financial audits, the payoff will be both immediate and enduring.