intro to legal risk management
TRANSCRIPT
What is risk?
Definition- any situation where there is uncertainty about what outcome will occur
There are many kinds of risk- however the 2 basic forms- business risk and personal risk
Personal risk- life is risky!!
House catches fire
You are injured in a car accident
Your family member has a heart attack
ETC
We are concerned with business/legal risk
1. Risk is costly! 2. Greater risk implies greater cost 3. Risk can also imply a greater loss than is expected- ie
Expected loss v Uncertainty because of risk
Over the last 20 years, corporations have been exposed to many risks including legal,
strategic risks, operational risks, regulatory risks and financial risks all resulting in
litigation, fines, penalties, bad press , etc. and of course loss of BRAND REPUTATION!
Why?
Society has changed the rules of the game!
Inside a company- business risks may be placed in many categories:1.Strategic2.Operational3.Financial4.HR5.Technology6.Legal and Regulatory7.Contractual breaches and damages However- all risks at the end of the day bear
legal consequences: lawsuits, government investigations, government lawsuits, fines, penalties, class actions, etc. All risks are therefore : Legal in nature!!
In essence- Legal Risk maybe defined as:
The probable occurrence of a future event or non-event that will have a negative impact on the company that could result in law suits, fines, investigations, crisis, reputational harm and of course the destruction of the company.
So- it is imperative to view all risk in a company or organization as potentially exposing a company to legal liability and of course to actions that will negatively effect the brand of a company!!
So – what to do? How do we categorize, identify, manage and
even think of risk? Remember- risk = loss of $$$$$
It is vital for the survival of the company to properly manage all (legal and business) potential risk
It is not just up to the risk management department to do it
By definition-- it is up to Legal to take an active role as well as senior management- even the Board!
In House counsel must now learn to proactively handle and mitigate risk.
The main role of in house counsel has changed from merely providing legal counsel to manage , control and minimize legal risk.
In house counsel must now become involved with the day to day management of business/legal risk.
Legal Risk Management or “LRM”
