Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.
The strategies to manage risk include shifting the risk to another party, avoiding the risk all together, reducing the negative impact of the risk, and accepting all or a portion of the consequences of a particular risk if the costs for containing the risk are not justifiable.
The nature of the legal risks that firms can face i their risk management process depends on whether the firm is a risk controller, efficiency enhancer, or risk transformer.
Risk Management - (1) actions intended to reduce or eliminate risks [...], (2) understanding and dealing with inevitable risks...
Risk exists virtually everywhere in business; from the obvious, easily insurable risks such as cover for property assets to more obscure, yet not insignificant, risks such as the loss of key employees to illness.
Corporations have come to rely on powerful business intelligence systems to mitigate risk and optimize results in their profit and revenue centers. These expensive systems sift and scrutinize all available data, seeking trends and spotting trouble. Sophisticated, customizable "scorecards" put the results in the hands of managers, who use the data reconnaissance for damage control and to enhance business strategies.
Most legal departments within companies are deployed with the purpose of fighting and managing legal risks once they have arisen, meaning, the remedies deployed are often always reactions. Pre- emptive legal risk management, however, would imply taking a proactive role in understanding the nuances of the business, honing the capability to juxtapose the actions/omissions of the business on to a legal sphere, foresee potential legal repercussions of such acts and prepare possible remedies to avoid that risk.
A risk is a legal risk if its source involves a legal norm. Thus, the risk needs to be the manifestation of a legal norm;s potential detriment. Both factual and legal uncertainty may influence legal risk.
The focus of good risk management is the identification and treatment of these risks. Its objective is to add maximum sustainable value to all activities of the organization.
Holistic risk management - a risk management philosophy that attempts to integrate the entire spectrum of exposures that can affect an organization, including operational and financial risks. Holistic risk management examines the effects of risk on the organization, rather than from the source of the exposure.
The relationship between risk management and legal ethics has recently become a topic of academic debate...