Effective Risk Management
A Risk Management Framework is essential in any modern-day law firm; the SRA Code of Conduct closely ties a firms’ need to manage their risks with the outcome focused regulations; Making risk something that cannot be ignored.
The SRA Code of Conduct, Chapter 7, Outcome 7.3 requires that
‘you identify, monitor and manage risks to compliance with all the Principles, rules and outcomes and other requirements of the Handbook, if applicable to you, and take steps to address issues identified.’
A good risk management framework involves the identification and management of risks and benefits within a business environment. Different organisations will have varying degrees of risk appetite so it is important that you consider your business objectives when formulating a strategy, but whatever approach you take it must be integrated into the culture of the firm for it to be effective. It will also help to ensure that the ownership of a risk is recognised and appropriate resource is allocated.
The most effective way to record risks is using a risk register and with regards to managing the risks all internal and external controls should be cost benefit appropriate, risks are transient and should continue to be monitored once the framework has been introduced, the probability and the consequence of the identified risks should be assessed in order to prioritise which is to be dealt with and visual representations are a good way of presenting this to get people’s engagement.
It is a common misconception that risk management is solely for damage limitation and firms can sometimes fail to identify the associated rewards. The effective management of risks can increase the probability of success, increase financial gain and reap the reputational awards associated with a successful firm. Please take the time to consider the following questions:
- Do you know what the risks to your business are?
- Are the identified risks being mitigated?
- Are you making the most of the opportunities presented to you?
Ensure that your business is ahead of the game by implementing your risk management framework today.
Author: Laura Griffiths