Risk management

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What is risk?

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:

  1. •

    how likely is it that the risk will materialise, ie what’s the probability?

  2. •

    if the risk does materialise, how bad will it be, ie what’s the impact?

See Practice Note: Protecting your practice—an introduction to law firm risk management.

SRA Standards and Regulations

General risk

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, company, LLP, partnership etc, that is connected to your firm by virtue of: 

  1. •

    being a parent undertaking

  2. •

    being jointly managed or owned, or having a partner, member or owner in common, or being controlled by your firm

  3. •

    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

  4. •

    common branding

Financial risk

You must actively monitor your financial stability and business

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