Chapter 3 Flashcards
What kind of mistakes can businesses reduce the likelihood of?
Expense of legal services and damage claims, distracting in terms of time and effort, harmful in terms of relationship & reputations
What is the Preventive Approach?
Has a thorough evaluation of the risks associated with the business’s activities to lessen the impact, compliance with legal rules and anticipation of changes in legal environment
What is the Reactive Approach?
Recognizes legal problems may still materialize, needs a strategy in place to deal with such developments
What is Risk Management?
Not a task for 1 individual since no single person has complete knowledge, involves managers and employees at every level
What is a Legal Risk?
Business risk with legal implications
What is a Enterprise Risk Management?
Process of identifying and managing all business risks
What has to be done in Step 1. Identify the Legal Risk?
Assess functional areas, Review business decisions, Examine business relationship, Analyze operations and transactions.
What has to be done in Step 2. Evaluate the Risk?
Assess probability and severity of loss. Recognize that not all risks are alike and shouldn’t be treated alike
What has to be done in Step 3. Devise the Risk Management Plan?
Avoid/Eliminate (when risk is too great or unwanted results are greater than advantages), Reduce (when it can’t be avoided, policies & procedures are introduced), Transfer (shifting it to someone else with a contract/ insurance), Retain (absorbing the risk, when it cost more to avoid it)
What has to be done in Step 4. Implement the Plan?
Carry out the plan; includes schedule of inspections, information about any insurance coverage, Monitor and revise the plan. Must identify those responsible for monitoring quality/delivering the service of producing, must be continual
What happens when prevention fails?
Attitude of government toward the business can change, should already have a way to address it when it arises
What questions should be asked when prevention fails?
What investigation should take place? What records need to be made of the incident? What follow up should be done?
When should you seek Legal Advice?
Should have someone to decide when the matter requires legal, seeking to soon is expensive
Who is a Lawyer?
They are legally qualified to practice law and provide legal services
What is a Law Firm?
A partnership formed by lawyers
