Articles

The Most Significant Legal Risks Faced by Modern Businesses

by Neha Sharma Digital marketing head

Operational risks are quite common in day to day affairs of businesses. Hence firm owners need to be on their heels and agile enough to predict such risks beforehand sand combat them accordingly. One mis-prediction can result in grave consequences that might severely affect the present and future revenue of the firm.

But, apart from operations, there is one type of risk that’s hard to predict and can result in disastrous consequences—legal risks. Laws and regulations are a complex concept that changes from location to location, between states, and countries. There are a lot of things happening in the legal world that might change frequently and one simple miss in following the legal terms can be catastrophic. Hence, it’s imperative to pay special attention to the compliance and regulatory affairs at each step of the business journey—new product launch, expansion, new service provision, and much more. Often, it’s not easy to manage all these legal affairs by firm owners and they look to outsource these tasks to external teams or consultancies specialized in legal risk management. Hence, a business management consultant offering end-to-end legal management, legal risk analysis, and comprehensive services can be in great demand and business of all sizes are looking forward to special legal advisors. So, what are the common risks faced by modern businesses? Here’s a detailed list—

Regulatory Risk

As mentioned before too, one of the most common type of legal risk is the regulatory hassles arising whenever there is a product line expansion, geographical expansion, new customer acquisition, partner acquisition and more. There are proper legal procedures that need to be duly followed before these activities are successfully done. There could also be economical legal affairs such as tax policies in different areas and all of this needs to be taken into account to avoid any potential problems later on.

Compliance Risk

This type of risks usually occurs when a business’ operations fail to abide by compliance rules, statutes, internal policies, and best practices related to the industry it operates in. A breach in compliance rules can lead to severe penalties that would substantially eat away revenues. A business management consultant specializing in legal issues usually take into account these risks before anything else and even advice on financial strategies to be built keeping in mind the compliance issues.

Contractual Risk

Contractual risk usually takes place when a mutual contract between the two firms is breached. Usually, in such cases, one firm has not been able to meet one or more of the contractual obligations and the other firm has hence sent a legal notice for the same. Contractual breaches are quite common in the business world and usually, settlement fees are agreed upon once the legal process is over. However, legal teams of firms can keep in the tab of various contracts, its updates, and accordingly advise a firm when contractual risks might occur; it might fail to meet the contracted terms, and what should be done in terms of operations to avoid those.

 


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About Neha Sharma Advanced   Digital marketing head

50 connections, 0 recommendations, 158 honor points.
Joined APSense since, May 11th, 2018, From kolkata, India.

Created on Jun 13th 2019 01:53. Viewed 386 times.

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