Getting past the barrier of information overload.
Legal risk
In a previous blog, Legal Risk: I don’t know what I don’t know, we acknowledged that there are many definitions of risk, but ultimately, it’s about trying to mitigate being unprepared for any event, good or bad, that can jeopardise the smooth running of your business, not to mention making preparing to exit a whole lot harder than it needs to be.
Legal risk, in some way, shape or form, is a part of any risk register. Alongside contractual risk and current compliance risk, legal risk could also include how to prepare for unforeseen legal events, such as new laws or changes to existing ones, which your business may need to be ready for in the future.
Information utopia
Only the largest of businesses have the luxury of their in-house lawyer, who knows the business so well that they can give the business a truly bespoke view of:
- what laws exist or are on the horizon;
- that are relevant to the business;
- how they will impact on the business;
- how the business can mitigate those, AND
- changes in the business that could trigger the application of current laws
The reality
For most SMEs, however, it’s a case of “muddling” through. Internet searches and newsletters provide useful information, but the real issue is how SMEs answer all or any of the above with certainty.
Information overload
There is no shortage of information on current laws, upcoming laws and related guidance. The issue is figuring out if you are on the right track in the first place so that everything you are looking at is truly relevant to the bespoke profile of your business and that you’re not overlooking anything.
The problem with information overload is that if you don’t know what you don’t know, any information that comes your way can take you down a path that seems right, but how can you truly be sure ….?
Outsourcing the hard bits may seem tempting, but whatever size your business is, there are benefits to having internal knowledge (another blog for another day). Knowing what laws are coming may help identify new products or services and refine existing ones.
The (critical) path to peace of mind
It is impossible to know what you are looking for until you first understand what laws currently apply to your business.
We suggest the following chronological approach:
- Understand your bespoke legal risk profile.
Completing a legal risk register as part of a risk management process is best. Risk registers do not float everyone’s boat, but they are a useful tool and are now a fact of everyday business life, especially where investment or exit are concerned.
- Have a plan to identify what internal factors might trigger changes to that legal risk profile, for example:
- Workforce changes (e.g. freelancers, agents etc)
- Diversification – (e.g. new products/ services/ markets)
- Growth indicators – turnover/ employee sizes may trigger legal obligations (e.g. data protection)
- Have a plan to stay abreast of new laws and changes to existing laws
This is difficult, but it will be much easier if you get 1 and 2 right! If you know what you are looking for, it will be a lot easier to consolidate all of that information that is zipping its way around the internet, and you’ll be better placed to make informed decisions on outsourcing for updates.
If you want to get ahead of or stay on top of your legal risk game, please call Tracey on 01202 729 444 or e-mail tracey@law-point.co.uk.
