Organizations invest significant amounts of money to avoid litigation. It is useful to weigh the costs of risk management against the possible outcomes. 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. Transparency is equally important for producers, workers and consumers. The rules must be clear and understandable to those who use the technology and to those whose lives could be affected by its use. You define who decides when, what information is needed to choose between different risk management options, and what questions need to be answered. In addition, individuals and businesses should have the opportunity to comment on proposed regulations and sufficient time to comply with the regulatory system before it comes into force.
Indeed, transparency can prevent further resistance because people assess risk based on “how the process (causing the hazard) is understood, the equitable distribution of the hazard and how individuals can control their exposure, and whether the risks are voluntarily assumed” (Fischoff et al., 1978). Risk criteria allow the organization to assess and compare risks. The cost of risk treatment is measured against the level of risk based on risk criteria. Risk criteria ensure consistency in how an organization identifies and measures each element of a risk. In the examples here, there are only three risk criteria: The informal notion of risk as the chance that something bad could happen is not a bad place to start defining risk. However, better management requires better definition. We need to divide risks into different measurable parts. An explicit legal risk tolerance policy achieves two objectives. First, it saves the organization money by calibrating the cost of risk treatment to ISO 31000. The organization cannot know how much to spend on preventive risk management if it does not have an acceptable risk target. As mentioned earlier, law firms tend to handle a lot of sensitive information, making them prime targets for cyberattacks. For this reason, the second most important coverage for a law firm is undoubtedly cyber liability insurance.
Another recommended coverage for law firms is liability insurance, which protects your business against employee-related claims, such as discrimination, harassment, and wrongful termination. For these reasons, this text begins with a broad discussion on how to assess risks in general. In this chapter, we learn techniques for assessing, assessing and managing legal risks. Risk management is a topic for an entire course in itself, so in this chapter we will cover only a few important points and then apply them to the law. Throughout the course, examples and exercises will relate to these concepts. The examples in this article are artificially accurate. They should illustrate a method for establishing a coherent and useful legal risk tolerance policy. With this policy in hand, we can calibrate risk management measures and communicate the value of legal risk management across the organization. While the content of this chapter is intended to provide you with useful templates for assessing legal risks, it should not be construed as encouraging illegal or unethical behavior. Companies are required to comply with the law and behave ethically. The model presented in this chapter is particularly useful when the law is not clear or when the question for the manager is what steps to take and what costs to avoid legal risks.
Immediately following a general introduction to the law in Chapter 2, we will devote the whole of Chapter 3 to the principles of ethical business conduct. A company`s attitude towards legal risks must also be influenced according to these principles. The first scenario shows only the impact of cost-related risks. The second scenario shows the impact of profit and cost risks on business valuations. This context allows us to measure and manage significant legal risks to the organization. Proper integration of risk and compliance rights, as well as strong interaction with internal audit, play an important role in reducing an institution`s potential exposure to regulatory and other responsibilities. Legal, compliance, risk management and internal control functions are of critical importance to the business. They should interact at different levels, and each should have a direct reporting line to the board or a committee of the board, as this helps ensure their independence. The controversy over the use of modern biotechnology has focused mainly on commercial release into the environment rather than use in laboratories for research, contained use in industry, or use in the manufacture of pharmaceuticals and veterinary drugs. However, given that the biotechnology industry is now the main user of modern biotechnology and the source of new products, the public is rather skeptical.
A Eurobarometer survey carried out in 2003 revealed that there is considerable discrimination against the public, at least in Europe. “Europeans continue to distinguish between different types of applications, particularly between medical applications as opposed to agricultural and food applications” (Gaskell et al., 2003). Support for genetically modified crops and foods decreased and rejection increased from 1996 to 1999 and remained stable from 1999 to 2002. Genetically modified foods, for example, are considered risky, morally unacceptable and unencouraging, but crops are – to the surprise of researchers – considered useful but risky, morally acceptable and preferred by a small majority. A Canadian survey found that “a total of 47.7% of Canadians consider the presence of GM organisms in food to be harmful to human health, while 20.7% consider them non-hazardous” (Leger Marketing, 2001). In the United States, “the position of the American public on the acceptance of genetic modification of food is decisive […] indecisive” (Hallman et al., 2002). Overall, 58% of Americans favor or somewhat favor the creation of hybrid crops through genetic modification, while 37% oppose it. In addition, the risk, compliance, legal and internal audit control functions should meet regularly so that each can learn and highlight issues that are important to the other, push issues to an early stage, and manage them across disciplines. Meetings should be held both formally at scheduled times and informally on an ad hoc basis so that all stakeholders feel comfortable sharing ideas, best practices and issues they have discovered. Such meetings should be encouraged at all levels; Senior management meetings are undoubtedly important, but collaboration with younger people can often avoid problems at an early stage.