Every month, we host virtual meetups for the different groups in our Community of in-house legal professionals. During the past month, we’ve been focusing on the topic of risk. Exploring the variations of risk appetite in businesses and how it translates into decision making, advisory, and contracts.
Here is a snapshot of some of the key takeaways that were discussed in these virtual meetups over the past month.
[Did you know that we host monthly meetings for in-house legal professionals across a number of sub-groups where you can meet, learn, and share with your peers all under Chatham House Rule?]
Number 1: Understanding risk as the foundation of advice
Legal advice given within a business which is risk averse is likely to look different from that given to more risk-tolerant businesses. With risk as the backdrop to all legal advice, it’s crucial to understand: what does risk look like in your business? What is your employer’s attitude to risk? How will this impact the advice you give?
However, it’s not quite that straightforward because everyone has a different interpretation of risk. Our High Growth group considered “What even is risk?” and debated whether it’s useful to categorise risks as “legal” or not. Perhaps all “legal risks” are “business risks”?
Number 2: Variety in risk appetites
Our FTSE & Friends and Crafty Starters groups both discussed the ways in which appetites towards risk can vary. Some of the reasons that risk appetite can change or differ, which they explored, included:
- Business unit
- Financial year phase
- Phase of business lifecycle
To make it even more complicated, they noted how even individuals within the business can impact a business’s approach to risk. For instance, a new CEO or the previous experiences of stakeholders can alter the risk appetite overnight.
Number 3: How can Legal work with risk?
So it appears that risk is a subjective thing with every business having its own appetite. And even within the same business risk can be viewed differently depending on the business unit, or that risk appetite can shift due to a change in management or the phase of the business lifecycle or financial year. One thing that remains is that Legal will always have risk in their mind when it comes to advice.
When it came to reacting or relating to risk, our High Growth groups considered the various ways in which this can happen, including
- Identifying it
- Mitigating it
- Managing it on a continuing basis
And although there are different strategies relating to risk, the group agreed that these shouldn’t just be for Legal to consider. These tasks should be distributed throughout the business because it allows for unique perspectives to come together and paint a full picture.
Some of the ways in which Legal can contribute to risk management which our Community discussed this month included coaching colleagues to understand risk, bringing diverse views together under a governance program, and contributing a legal perspective to identified risks.
Similarly, our FTSE & Friends group also highlighted the importance of standardisation for managing risk. This includes creating resources such as FAQs and playbooks, but to also document exceptions and approvals.
There were lots of interesting discussions on the topic of risk within this month’s Community calls. Huge thanks to everyone who joined these sessions for sharing their insights and experiences so candidly.
Do you want to join us for these monthly meetings for in-house legal professionals held all under Chatham House Rule? Join our Community for in-house legal.