Your approach to risk classification should be tailored to your organizational context. We will not mention the overlapping classifications for the most part, except to say that risk reporting in overlapping categories can lead to a successful identification of risks that is more important than the classification itself. Regulatory risks come in many colours, making it difficult to identify regulatory risks. Some regulations are cross-sectoral, such as taxation and labour and employment. Some regulations are specific to a jurisdiction: national, regional or local. Regulations may address specific practices such as clinical trials, consumer product protection or financial disclosures. Regulatory risks may be significant or unclear. What regulations apply to your organization? To use a tired sentence: “It depends.” Employee behavior, intellectual property, business practices and more lead to lawsuits. The risk of litigation receives the lion`s share of media and board attention. Litigation is not necessarily the most damaging legal risk. Freedom of Information Publication 123456 Legal Risk Guide for Government Legal Service Lawyers The information was published on August 30, 2018 What do we mean by legal risks? Why do legal risks warrant their own categorization and analysis? These risks certainly overlap.
Does an infringement claim represent a contractual risk or a litigation risk? They also overlap with other types of risks, which are often outside the lawyer`s jurisdiction. Is the risk that a loan agreement will be unenforceable against a borrower a contractual risk or a credit risk? Identifying contract risk requires a review of the contract from the perspective of the counterparty and from the perspective of your business. Treaties go both ways. Any party may commit a violation. To find out the risk associated with a single contract, look at each significant provision — the performance obligations — and ask yourself, “What happens if we violate this provision and what happens if the other party violates this provision?” The list of contractual risks will grow rapidly. A Legal Risk Guide for Government Legal Lawyers We can subject both situations to a legal risk analysis. Contracts create business relationships that funnel money into an organization in the form of revenue and out of an organization in the form of expenses. Contracts may relate to assets and liabilities. Contract risk quietly and chronically threatens the health of the organization. For example, a lawsuit in an influential state invalidates fees charged to consumers as undisclosed interest charges, which are subject to damages and punitive damages. Our organization charges similar fees.
However, fees are charged a number of times and in known states. The law in question contains well-known penalties. We have the building blocks to measure and manage legal risks arising from similar litigation. There are four types of legal risks. Legal risks arise from contracts, regulations, litigation and structural changes in the market. Organizations invest significant amounts of money to avoid litigation. It is useful to weigh the costs of risk management against the possible outcomes. By the time management meets with the lawyer to discuss the question of “what are the chances that we will lose this case and what the likely damages are”, it is too late for risk management.
Before we enter into litigation, we need to identify areas where there are uncertainties that impact our objectives. Risk management is not a matter of fortune-telling. Instead, we want to reduce the possible outcomes of certain events. Airline deregulation, antitrust complaints and competitors` pricing practices are examples of structural legal risks. This does not mean that only lawyers can perform a legal risk analysis or that lawyers are sufficient for the legal risk analysis. One of the most powerful and intangible benefits of this legal risk management course is that it can bridge the gap between lawyers and their peers across the organization. For better or worse, government regulations infect every sector of the economy. These regulations set standards of care, requirements, require reports and presentations. With each regulation, the risk of fines, penalties or injunctions increases to promote compliance. Regulatory risks are inevitable and potentially embarrassing.
For the purposes of this training, there is a legal risk if the event or consequences are legal in nature. To put it in ISO 31000 terms, there is a change of circumstances that is legal, or the effect of a change of circumstances is legal. We will explore concrete techniques to foster collaboration on the challenges facing the entire organization. Structural changes in the market are usually the result of far-reaching legal changes. In financial services in the United States, for example, the Dodd-Frank Act1 revised the rules applicable to investment firms and banks.