This overview of measuring and managing legal risk breaks down elements of legal risk and places them in a risk framework. The presentation also discusses risk tolerance and valuing risk for the organization. Contract managers, lawyers, risk managers and compliance officers all benefit from analyzing legal risk in quantitative terms.

1. 0
How to
Measure & Manage
Legal
Risk

2. 1
Mark Little
President & CEO
mark.little@contractanalyst.com
www.ContractAnalyst.com
855-517-2193
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3. 2
Risk
Definition
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4. 3
Risk
R = p * LGE
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5. 4
Risk
risk is the likelihood (probability) of
consequences (loss given event)
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6. 5
Risk
“effect of uncertainty on objectives”
- ISO 31000
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7. 6
Risk
Legal
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8. 7
Legal
structural regulatory
contractual litigation
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9. 8
Fundamental industry norm
Scope is general
Alters competitive landscape
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10. 9
New or modified regulations
Scope is general or specific
Civil, criminal, directive
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11. 10
Lawsuit based on conduct
Scope is specific
Civil penalty; equitable relief
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12. 11
Breach, not enforceable, …
Scope is specific
Financial performance
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13. 12
Risk
Tolerance
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14. 13
Company A
$(152.78)
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15. 14
Company B
$(211.68)
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16. 15
Company C
$(756.08)
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17. 16
Best?
context matters
capacity to absorb risk
cost of risk management
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18. 17
Risk
Assessment
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19. 18Copyright Contract Analyst, 2013 All rights reserved

20. 19
Risk
Identification
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21. 20Copyright Contract Analyst, 2013 All rights reserved

22. 21
Risk
Analysis
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23. 22Copyright Contract Analyst, 2013 All rights reserved

24. 23Copyright Contract Analyst, 2013 All rights reserved

25. 24Copyright Contract Analyst, 2013 All rights reserved

26. 25Copyright Contract Analyst, 2013 All rights reserved

27. 26Copyright Contract Analyst, 2013 All rights reserved

28. 27

29. 28
Risk
Evaluation
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30. 29
%
Very likely
Likely
Possible
Unlikely
Very unlikely
or
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31. 30
$
Critical
Major
Moderate
Minor
Insignificant
or
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32. 31
Rating
v.
Ranking
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33. 32
Risk
Treatment
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34. 33
Necessity?
Priority?
Options?
Decision?
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35. 34
Risk
Context
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36. 35
4% growth in sales
4% decline in expenses
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37. 36
Random 0 - 5% increase in expenses
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38. 37
Random 0 - 5% lost revenue
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39. 38Copyright Contract Analyst, 2013 All rights reserved

40. 39
Ready
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41. 40
Mark Little
President & CEO
mark.little@contractanalyst.com
www.ContractAnalyst.com
855-517-2193
Copyright Contract Analyst, 2013 All rights reserved