Legal and Compliance Risk Management Framework

An effective risk management framework has the potential to help legal departments mitigate future risks without hindering growth. A risk management framework can protect against losses of competitive advantage, legal risks and business opportunities. An effective risk management framework should be more than a set of standards and rules. It should have the ability to deliver actionable results that make a real difference in your business and workforce performance for the long term.

To develop a risk management framework, start by discussing the structure or governing principles your organization uses to manage risks with key stakeholders. Use this information to identify framework characteristics that are most relevant for your organization.

Leverage the COSO EMR framework or the ISO 31000 framework, the two primary risk management standards, as inspiration or foundation for your ERM framework.  

To identify your potential legal risks, conduct a legal and compliance risk assessment as well as an enterprise risk assessment. Doing so ensures a comprehensive view of the risk landscape from the organizational and functional viewpoints.

By conducting a stand-alone legal and compliance risk assessment, legal can identify major functional risks that do not surface in enterprise risk assessments but still present a significant risk such as privacy, third-party and anti-corruption risks, given their narrow scope. Coordinate enterprise risk assessments with your legal and compliance risk assessment to obtain further insights on risks surfaced in both assessments.

Vendors and third parties are now an essential part of every large organization’s daily operations. Selecting and supporting the right vendors, together with the balanced approach to effective risk management, are equally vital.

A vendor risk management plan is a program designed to protect the organization from disruption, uncertainty and volatility from risks from vendors. Having a vendor risk management plan in place will help you maintain quality of service, manage costs and determine ongoing supplier viability.

A risk management framework represents the agreed-upon structure or governing principles an organization uses to manage risks. There is no one-size-fits-all model, and most organizations develop a framework internally that adapts elements of widely accepted standards. A risk management framework can offer several key benefits, such as protection of assets, reputation management and the optimization of data management.