Mcormick, R. 2004 Legal risk management is not a precise and subjective science of the institution`s situation and is mainly due to the lack of an adequate communication channel, undefined institutional objectives (such as the absence of policies and regulations), the unexplained flow of information between different employees and departments, the absence of delegation of authority to define risk mitigation tasks. [5] As mentioned above, legal risks may arise mainly due to non-compliance with laws or regulations, as well as breach of contracts and agreements. Let`s take a closer look: a company has a number of contract-based relationships; For example: with suppliers, customers, third parties, financial institutions, public administration, employees, digital marketing, etc. These relationships already create a legal risk that needs to be properly managed. Companies have to conclude contracts almost every day. As a result, a sales organization faces contractual risks on a daily basis. As the risk of litigation is difficult to assess, markets often severely punish the companies concerned. As a result, the indirect costs of increasing financial burdens may become as significant as any judgment or settlement possible. Risk is anything that makes the outcome of an event uncertain and detrimental. Legal risks are the risks to which a commercial organization is exposed in the context of legal matters. Second, conduct a risk assessment that determines the internal and external context of the company, project and entrepreneurship; and thus be able to define the relevant criteria to be applied.
An example of legal risk may be the case where a company with the promotion of teleworking complies with new regulations approved by different governments. These rules concern, for example, the protection of workers or health and safety at work. Therefore, the company must have a plan in place to avoid, assess and mitigate these legal risks. Various issues that can lead to legal risks are commercial contracts and agreements, assets and related litigation, issues related to intellectual property rights, patents, copyright infringement, etc. In other cases, a legal dispute is the result of a sharp drop in a company`s share price, not its cause. Either because shareholders hold their managers legally responsible for their incompetence, or because they accuse them of not providing adequate information. One wonders if this makes economic sense, because in the end, the money leaves the company and the return is reduced in the part that belongs to the lawyers (which can represent a third of the compensation). Similarly, the legal risk is related to the violation of contracts and commercial agreements with third parties. Ando. Training research on legal risks.
This will help minimize the possibility of legal risk in the form of claims for damages, penalties, lawsuits, etc. The legal risk arises from the legislation that affects the commercial or financial contracts concluded. This means that the national and international legal system can provide the necessary assurance that contracts are in accordance with the law, valid and can be performed. In addition, the lack of full delivery of goods and services, deficiencies in the provision of services, quality problems, etc. are all contractual risks to which a company is exposed. Non-compliance may result in the imposition of penalties. It can also lead to legal action against the company, which can cause you significant losses. Well, what have you© read or heard about legal risks? In most cases, you certainly have country, operational, financial, political, banking, etc. risks, but what© do we know about legal risks? Can it be managed? Is there a treatment? What are the most common? One of the most obvious legal risks of doing business, which is not mentioned in the definitions above, is the risk of arrest and prosecution. This can pose a risk to a business and cause you unnecessary losses in the form of wasting time dealing with such disputes. In addition, the costs incurred by the company to combat these cases can be very high. In any case, to deal with this risk, the organization must have a sufficiently competent legal team.
In this way, for example, to be able to know all the regulations that the product you want to put on the market must comply with. Basel II classified legal risk as a subset of operational risk in 2003. This concept is based on a business perspective and recognizes that there are threats in the company`s operating environment. The idea is that companies don`t operate in a vacuum, and by seizing opportunities and connecting them to other companies, their businesses tend to become subject to legal responsibilities and obligations. [1] In this article, I will try to illustrate what a legal risk is, the different types and characteristics. After putting in place an appropriate structure, it is necessary to identify threats that may pose a legal risk to the organization. In other words, this type of risk refers to the uncertainty that can usually be created by the legislation of a country or region. This is for the expected results of a company. Most of the time, it is assumed that the greatest risk is when there is a violation, and of course it is one of the most important there is, there is no doubt about it.
I will© tell you something, do not be confused, not only the risk of breach of contract or regulation is what your company, company, project, investment, etc. is exposed to. This type of risk is usually the result of non-compliance with the laws, rules and regulations of the government and other legal bodies that control companies. These risks correspond to your contractual obligations to third parties. A company may face legal risks and obstacles in the event of a breach of the same contracts. Therefore, cases and loopholes that may allow fraud, theft and illegal and unethical activities should be controlled to the extent possible. Non-performance and punctual delivery may present legal risks for the Company.