Managing Legal Risks and Growing with Confidence

Managing Legal Risks and Growing with Confidence

Practical steps to minimise legal risks, like compliance, contracts, and liability concerns.

Legal risk is the likelihood of financial or reputational loss resulting from a lack of knowledge when handling your business. These risks are common, but like most things in life, the correct knowledge can assist you in avoiding them. Listed below are  types of legal risks, what they are and how they can be avoided.

Compliance Risk

Compliance risk occurs when a businesses’ practices do not follow industry laws and regulations, risking legal, financial and criminal exposure. They are usually not intentional, however. Human error, improper data protection and a lack of monitoring can all lead to compliance risk.

The easiest way to assess a business’ susceptibility to these risks is to use an audit, an independent examination of a business’ financial information

Contract Risk

Contract risk ensues when a business breaches a contract that it entered, as resulting from a misunderstanding or negating the terms of that contract. As such, a contract management system is needed to ensure that your contracts are managed and enforced correctly.

Liability Concerns Risk

Liability risk occurs when a business is unexpectedly liable to criminal and civil charges for activities they were knowingly complicit in. They can also include having a business’ license to operate overturned by a regulator.

Ways to avoid these unwelcome charges include following the required steps carefully when conducting operations, remain aware of legal changes and consult professional legal advice to understand the ins-and-outs of the law relating to your field.

Assets Risk

Legal risk also applies to assets owned by a company, including tangible assets (eg. Buildings) and intangible assets (eg. Human capital and intellectual property). To avoid this risk, provide your General Counsel with a clear picture of all of the company’s assets so they can conduct a proper risk assessment.

If you have any questions about the legal side of your small business, please do not hesitate to contact me. I am here to help.