Key risks
Key risks

The following Practice Compliance guidance note provides comprehensive and up to date legal information covering:

  • Key risks
  • What is risk?
  • Key risks
  • Internal v external risks
  • Higher risk practice areas
  • Higher risk clients

Effective risk management is a cornerstone of the SRA Handbook 2011. To manage risk effectively you must first identify the risks that could impact on your business.

Our practice note: Formulating a risk management policy sets out how you might do this. This practice note identifies some common risks facing law firms.

What is risk?

Risk is not easily defined and can mean different things to different people. It can be loosely defined as the possibility of loss or other adverse or unwelcome outcome.

Risk is typically defined by way of a list of risk categories, eg:

  1. strategic risk—risks that could materially affect your firm's survival or profitability

  2. operational risk—risks that are associated with day-to-day activities and management

  3. regulatory risk—the risks you face from non-compliance with your regulatory obligations

Some risks may fall into more than one category.

Our Precedent Risk register is designed to hold risk information that has been categorised this way.

You may prefer to define risk differently and design your risk register to reflect this, eg by reference to specific activities:

  1. budget

  2. client acceptance

  3. giving undertakings

  4. referral and fee sharing arrangements

  5. critical dates

  6. work type

  7. confidentiality

You may not be able neatly to categorise all the risks you face, whichever way you decide to do it. However, it is more important to identify risks than to meticulously categorise