Every business owner we talk with wants to keep their risk as low as possible…it’s just smart business. Yet all too often we see that the business is doing things that might actually be increasing their risk overall. How can this dichotomy exist when we are all striving hard to keep our risk as low as possible? One answer might help solve this dilemma for you.
If you’re like most organized business owners, there are certain things you do for your business on an annual basis to keep things in alignment and to keep your risks down. Things such as putting together a detailed Strategic Plan with action items, reviewing your Insurance coverage, doing a review with your accounting firm, and a variety of other activities. All of these are great at helping you to better understand where you are, where you are going, and helping to eliminate your risk. But there’s one other tool you may be missing.
Organizational Risk Assessment
We have found that most organizations don’t do an overall Annual Risk Assessment that includes a variety of areas in your business. While some of the areas in a Risk Assessment can be covered by the items I mentioned above, one that is almost always missing is a review of your legal situation. This is generally not on the list of most business owners and only becomes an issue when it gets tested by a particular issue. This can be avoided…and should be one that becomes part of your annual review process.
Legal Risk Assessment
What exactly does this mean to have a Legal Risk Assessment? In a nutshell, it is reviewing your current legal contracts, ownership documents, HR documents, employee agreements, and other such items you may be using in your organization. It’s doing a deep dive into what you have in place to ensure two things are happening.
Determine Appropriate Legal Documents Currently in Place
First, it is designed to do an analysis to determine if you have the appropriate legal documents in place to protect your business the way it is operating. Often times there are one or more documents missing that could create significant exposure for your organization. Creating an “inventory” of the appropriate documents is the first place to start to help you lower your risk.
Without this check, you could be exposing you and/or the company to a legal issue that might not be handled with your current legal strategy. This checkup allows you to see what areas of your business need to have protection to keep your risk as low as possible. Generally, most organizations need to create some additional strategies and documents to give them the protection they need and to help either keep their risk low or to help lower it.
Ensure Legal Strategies, Structures, and Documents are Up to Date
Second, once you know what legal strategies and structures are necessary to lower your risk, it is important to ensure they are up to date. This is one area most leaders are guilty of because it isn’t always top of mind unless there has been an issue or an incident. But just like other areas of your business, if left unattended or not inspected on a regular basis, things can get out of alignment.
If your business didn’t change at all with regard to growth, products, services, people, or assets, you probably don’t need any changes. But then again, if none of these things changed, you might not stay in business very long in today’s competitive environment. As they say, thee only constant we can count on is “change.” And as things change, so does the potential of our legal issues.
Getting an updated Risk Assessment of where you are with regard to your legal strategies and contracts is an essential part to keeping your organizational risk in check. And here’s the best part…once you start on this process of reviewing your legal situation, it gets easier (and potentially less expensive) each year. If you are consistently reviewing changes, it becomes much faster and easier to identify what needs to be updated and what can remain the same. This becomes a process that consistently helps you lower your risk and avoid potentially costly law suits or legal issues.
What to do next…
If you are not sure of your current legal strategies and what your current level of risk might be from a legal perspective, we would recommend doing both of the items discussed above. We created a simple way for you to better understand your current risk situation might look like (which every business owner wants) with our Risk Assessment Tool. I’d also be happy to meet with you (complimentary of course) to discuss your business and personal situation further and give you some insights about how you might want to proceed.
If you better understand where you are with regard to Risk, you might also want to incorporate it into a consistent (at least annually) review process so you can stay as current as possible with your legal situations. Sure, surprises can come up, but they will generally be less frequent and you will be better prepared to handle them if you are reviewing your legal strategies on a consistent basis. We created My Concierge CounselSM specifically for this purpose and with this in mind. If you would like to learn more about this, we would be happy to share how this would work for you and your organization…just ask.
I hope you have found this helpful and given you a different way to look at your business. If it has, please share this with others inside your company and your colleagues who are running or leading other businesses. Our primary mission at Generations Law Group, LLP is to help everyone find productive ways to lower their business AND personal risk. This is just one way you can start to do this…but it will tell you a lot about you and what has happened over the past few years with regard to your business risk. Let’s make sure your risk is as low as it can be while you continue to grow.