The following Practice Compliance practice note provides comprehensive and up to date legal information covering:
A risk management policy outlines the risks posed to a business and provides a set of actions to be taken to both prevent the risk from occurring and reduce the impact of the risk should it happen.
This Practice Note provides a guide to the features usually included in a risk management policy.
There is a widely accepted definition of risk, ie:
Risk = probability x impact
So, for any given risk faced by your business, there are two questions:
how likely is it that the risk will materialise, ie what’s the probability?
if the risk does materialise, how bad will it be, ie what’s the impact?
You must identify, monitor and manage all material risks to your business.
This obligation extends to risks that may arise from a connected practice, ie a person or company, LLP or partnership etc that is connected to your firm by virtue of:
being a parent undertaking
being jointly managed or owned, or having a partner, member or owner in common, or controlled by or, with your firm
participating in a joint enterprise or across its practice generally, sharing costs, revenue or profits related to the provision of legal services with your firm, or
You must actively monitor your financial stability and business viability—once you are aware that you will cease to operate, you must effect the orderly wind-down
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