Management and Organizational Studies 2275A/B Study Guide - Insurance Policy, Legal Risk

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Legal risk management plan: legal risk a business risk with legal implications, legal risk management a comprehensive action plan for dealing with the legal risks involved in operating a business. Step one: identify the legal risks: assess the organizations functional areas. Functional areas are those that are recognized in business organization charts like accounting, finance, marketing, production, human resources and information systems: review the organizations business decisions, examine the organizations business relationships and asses those relationships. Step two: evaluate the risks: assess the probability of loss, assess the severity of loss. Step three: devise a risk management plan: avoid or eliminate the risk. Risk avoidance the decision to cease a business activity because the legal risk is too great: reduce the risk. Risk reduction implementation of practices in a business to lower the probability of loss and its severity: transfer the risk. Risk transference the decision to shift the risk to someone else through a contract: retain the risk.

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