Business attorneys can help a company address legal claims and issues such as worker’s compensation, disputed contracts, intellectual property law, and more. They can also write contracts that protect the company’s interests on a long-term basis.
Preventative Measures
Business lawyers are often called upon to help a company reduce risk by working on preventative measures. This can include reducing the likelihood of civil claims and business litigation. This may be accomplished by reviewing how the organization is run, and it can also be feasible to put new procedures in place that would provide greater protection against specific categories of risk.
Information campaigns are one of the most popular strategies for working on preventative measures. This might include brochures, posters, or public service announcements on radio or television. It can also be done through speaker engagement or information hotlines.
Companies need to take the time to allocate resources to preventative measures. This might mean ensuring that these people have specific roles and that budget items are devoted to this activity. It is also important for senior management to assign authority and responsibility “At the appropriate levels” within the organization.
Detection
A key part of risk management is identifying and addressing issues before they become problematic. Business attorneys like those Underhill Law Denver Business Attorney can help with this by conducting legal risk assessments, creating a risk register and providing insights into a company’s risks.
Lawyers also have a unique advantage in understanding legal issues that can threaten the company’s reputation or financial assets.
But he points out that assigning responsibility for managing risk appropriately is crucial. The senior management team should consist of people whose job duties include an overview of the entire organization rather than just a functional focus. This helps prevent a “myopic view” of risk. A comprehensive risk management strategy includes five avenues to reduce risk: risk avoidance, risk transfer, risk spreading, and risk reduction (Figure 27-4). Lastly, residual risk must be acknowledged and accepted.
Response
When risks are identified, project teams need to determine how to respond. A common response is to reduce the risk. This may involve adding extra tasks, action items or reserves of time and money. It is important to consider risk tolerance and thresholds when developing a risk response plan.
Another option is to transfer the risk. This may involve purchasing insurance or including specific language in a contract arrangement. For example, manufacturing firms often hedge raw material prices.
Lawyers are particularly well-suited to this task because of their analytical and structured approach to problem-solving. They are accustomed to seeing issues from various perspectives. This gives them a less myopic perspective than other functional leaders’ views. This allows them to translate legal training into a framework the board and ownership can use. This is vital to bring the value of risk management to life in the organization.
Monitoring
Once risks have been identified, assessed, and mitigation strategies selected and implemented, the organization will still need to monitor them. The monitoring process feeds information into other risk management activities. It can help determine whether a particular strategy is working or needs redefined.
This can be done by checking on the effectiveness of the mitigation measures or, more generally, monitoring what is happening to a risk factor and assessing its impact. Monitoring can take place in many ways, from reviewing reports and data to holding regular field visits, meetings or telephone, skype or email conversations with project participants, implementing organizations and government departments, and donor organizations.
Having a system for monitoring is essential to success. Without it, monitoring can become like a haphazard exercise where no one knows what they’re doing or how they’re doing it. A system ensures that the necessary insight is available for decisions on the next steps.
