The question from the CEO that every General Counsel dreads. Avoid this question and sleep better at night by integrating legal risk assessments into the planning cycle for the Law Department. By “legal risk” we mean risk flowing from the enterprise’s failure to comply with legal or regulatory obligations.
Many in-house lawyers may respond by saying, “...we think about and manage legal risk all the time, it’s what we do”. However, there is a world of difference between thinking about risk in a general or even a very case-specific way and strategically identifying, evaluating and managing legal risk.
The strategic approach requires discipline, strong business engagement and the allocation of suitable resources - most importantly, time. That can be difficult to achieve, particularly in an environment where Law Departments are constantly being asked to do more with less. But it is an investment that can deliver enormous avoidance dividends - avoiding the regulatory shut down which derails an IPO for example, or the sanctions violation costing hundreds of millions of Dollars in fines or settlement payments.
The top performing in-house counsel will partner with the business to embed a legal risk assessment process which evolves with the business, for example, to reflect the additional or different risks which come with an acquired business or entry into a new geography or market space. The best run processes will not result in a laundry list of theoretical risks, but a robust evaluation of the residual risks facing the business and an actionable, prioritized risk management plan.
In this thread we outline the “how” and the “what” of legal risk assessment. That is, we describe the process and the critical success factors and then set out what a General Counsel can reasonably expect in terms of the deliverables. The approach we describe is one which can be tailored to fit the needs and resources of all businesses from start-ups to global corporations.
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