In this blog (#3) of Tandem Strategic Legal Advisory, I focus on Legal Risk Management; Do you know your Top10 Legal Risks by heart? This is why you (as General Counsel) should.
Risk Management is often driven by an Internal Control (IC) Department as part of the Finance function. Many General Counsels will get a visit from their IC colleagues to talk about which risks to include in the Risk Register of the company. This is usually part of a quarterly or annual cycle. And for the benefit of an Audit Committee and the preparation of the Annual Report. Thus far the process.
But what can and should a General Counsel do about Risk Management and Legal Risk Management in particular. How to you derive your Top 10 of Legal Risks and how to go about managing these day by day? This topic has become more important as the world moves faster and change is happening at a faster pace as well. Risks have become more fluid.
In my respective roles of a General Counsel, I would discuss this topic in my Legal Team and let each of the lawyers think about these Top 10 Risks from his or her perspective. And then I would consolidate these lists into a Top 10, from most material (and most potential impact) to least. Next step was to discuss and test this list again in the Legal Team and with colleagues from Internal Audit, HR, IC and other functions. And to add an outside view from external counsels that are involved with your company for a prolonged period of time is also helpful. Even your external auditors will be glad to chip in and share their views.
This process results in a solid Top10 Legal Risks which you can update and validate several times a year and in particular before the Annual Report is released. It is important for the organization to know these Legal Risks. But also for a General Counsel as it helps to allocate your time to the most important topics and risks. As the saying goes “a creaking wheel uses the most oil”. It is not always the things that take most of your time are also the most important ones. Having a dynamic Top10 Legal Risks helps you to keep in check with the changes in your organization and the world you operate in.
Examples of key Legal Risks are for instance (i) Commercial Contracting risk, (ii) Environmental Risks, (iii) Disputes, and (iv) Export Controls. The list obviously depends on the type of business you are in and can be broken down into sub risk categories and made more specific to your type of business.
Want to know more? Feel free to contact me Tandem Strategic Legal Advisory if you would like to explore this important topic further.
Written by Tjeerd Wassenaar, Founder of Tandem Strategic Legal Advisory: “Contributing to solving your Corporate Event; in Tandem”