Management and Organizational Studies 2275A/B Chapter Notes - Chapter 3: Formal System, National Land Company, Debt Management Plan

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Chapter 3: Managing Legal Risks
Assessing the Legal Environment
Balance between managing the present and planning for the future
Legal mistakes are costly, distracting and harmful
Preventative approach requires a thorough evaluation of risks
Emphasis is on compliance with requirements and anticipation of changes
Reactive approach needs a strategy to deal with such developments
Legal Risk business risk with legal implications
Legal Risk Management Plan
- May have its own department or may be done by CEO or someone
outside the organization
- Internal/External lawyers are involved
- Managers at every level
- 4 step process
1. Identify legal risks
2. Evaluate the Risks
3. Devise a Risk Management Plan
4. Implement the Plan
Applying the Four Step Process
Identify the Legal Risks
Assess the organizations functional areas
- Accounting, finance, marketing, production, HR, info systems
- Useful starting point for risk analysis
- Some possible risks: misleading advertising; inferior products;
harassment; downsizing; wrongful dismissal; inadequately
maintained records
- Employees can help identify risks
- Review the organizations business decisions
- Examine the organizations business relationship and assess those
relationships
Review Business Decisions
- Asses risk in decisions concerning financial arrangements (credit
terms and sales)
- How contracts are worded; may involve standard form contracts
- Do employees understand contracts?
- Review land occupied to ensure safety; look for hazards before
purchasing land
- Plan for hiring, firing and dismissing employees
Examine Business Relationships
- Internal and external
- Employee difficulty, injury, discrimination
- Payment/delivery to/from suppliers
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Document Summary

Balance between managing the present and planning for the future. Legal mistakes are costly, distracting and harmful. Preventative approach requires a thorough evaluation of risks. Emphasis is on compliance with requirements and anticipation of changes. Reactive approach needs a strategy to deal with such developments. Legal risk business risk with legal implications. May have its own department or may be done by ceo or someone outside the organization. 4 step process: identify legal risks, evaluate the risks, devise a risk management plan, implement the plan. Accounting, finance, marketing, production, hr, info systems. Some possible risks: misleading advertising; inferior products; harassment; downsizing; wrongful dismissal; inadequately maintained records. Examine the organizations business relationship and assess those relationships. Asses risk in decisions concerning financial arrangements (credit terms and sales) How contracts are worded; may involve standard form contracts. Review land occupied to ensure safety; look for hazards before purchasing land. Plan for hiring, firing and dismissing employees.

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