It is critically important that the outcome of the legal risk assessment exercise is viewed by business colleagues as useful. This requires that the leader of the exercise is fully focused on developing an actionable plan. That plan (the Risk Management Plan) will outline a specific set of actions designed to address the prioritized risks identified in the exercise and allocate risk owners (e.g. members of the management team and or the Law Department). In practice the implementation of this plan will require regular touch points for discussion and support for the management team to ensure that the plan is more than a polished document.
Further, it is essential that this is not seen as a one off, tick the box exercise. Risk evolves and changes: new legislation is introduced or the nature or scope of the business changes. To stay abreast of risk, in-house counsel should take the lead in ensuring that the risks are tracked and re-evaluated periodically. If there is a major shift in the business, we strongly recommend that in-house counsel take time to consider the new or enhanced risks that follow from that shift and ensure that they are embedded in the risk management plan accordingly.
A robust legal risk assessment built into the Law Department operating model and as a strong component of the corporate governance frameworks adds value to the business, it allows the company to better navigate uncertain waters and to reflect deeply on the risk appetite of the enterprise, with a clear understanding of, for example, the potential consequences of simply accepting a risk, as a valid company company strategy.
In-house lawyers would be doing the right thing by putting together a solid
process that can rapidly show positive results in the decision making. This way the process will be more likely perceived as supporting a business growth. This, in turn, will generate the all-important management buy-in. So, whether you are supporting a startup or a global corporation or something in between, consider this as an investment that will help you and your business colleagues sleep better at night.
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