Legal risk management panel discussion — key talking points
Stephenson Harwood hosted a seminar titled ‘Legal risk management: managing for success’ on 25 February 2014. Below is a summary of the panel discussion that took place.
The regulatory climate
Legal risk management is as difficult as it has ever been, for two reasons. First, regulators are acting significantly more aggressively than they have done in the past and are less willing to compromise or co-operate with companies. This has affected the initial willingness of businesses to take risks, knowing that — should regulatory difficulties arise — it will be significantly more difficult to control the outcome. Secondly, the consequences of a failure to manage risk are often worse than before: social media has now given aggrieved parties a very public forum for airing discontent and can cause significant reputational or commercial damage to organisations that have otherwise acted entirely within the law. These issues are common to almost all businesses, which must be aware of this to manage risk effectively.
The value of risk management procedures
The panel were asked for their views on how to balance the need for both effective processes and procedures on the one hand and for common sense and analysis on the other. In other words, how could the use of risk management processes avoid becoming a box-ticking exercise? The panel stressed that clear policies and procedures were good, not least for providing an audit trail for dealing with regulators and a guide for most employees in an organisation. However, processes and models were not an end in themselves; they are only useful to the extent that they are implemented, reviewed, and tailored to the business that is reliant on them. Problems arose not only when models of risk were unfit for purpose, but also when otherwise adequate models were followed slavishly, or relied upon without a careful analysis of relevant risks. In short, risk management procedures and models could be excellent servants in managing risk, but would always be terrible masters…
Click on the link below to read the rest of the Stephenson Harwood briefing.
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