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Legal risk management

Legal risk management. Tobias Mahler Norwegian Research Center for Computers and Law Institute for Private Law The faculty of Law University of Oslo. Agenda. Introduction Risk management Legal risk management A real-life example Graphical modelling of legal risk. Risk management.

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Legal risk management

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  1. Legal risk management Tobias Mahler Norwegian Research Center for Computers and Law Institute for Private Law The facultyof Law Universityof Oslo

  2. Agenda • Introduction • Risk management • Legal risk management • A real-life example • Graphical modelling of legal risk

  3. Risk management

  4. What is risk management? ISO 31000:2009

  5. Risk matrix

  6. Who does risk management in an enterprise? • Board of directors/CEO: enterprise risk • Chief risk officer (CRO)/chief finance officer (CFO): financial risk • Product developers (e.g. engineers): product risk • Safety officer: risk related to health/environment/safety • Project managers: project risk • IT system engineers: IT security risk • Compliance officer: compliance risk • General Counsel (Legal): Legal risk?

  7. Risk and uncertainty • Risk is the effect of uncertainty on objectives. • ISO 2009 • Uncertainty is deficiency of information related to or understanding or knowledge of an • event, • its consequence or • likelihood. • Uncertainty about • Facts • Legal norms

  8. Legal risk management

  9. Legal risk management Legal risk management focuses on • the management of legal risk and • the legal management of risk.

  10. Legal risk • A legal risk is a risk that has a legal issue as its source • A legal issue is a set of facts that are assessed under a set of legal norms.

  11. Empirical and legal uncertainty

  12. Legal risk management process

  13. Topics in legal risk management

  14. A real-life example of identified legal risk Source: SAP, IFRS FINANCIAL REPORTS (2007), p. 56

  15. Uncertainty regarding facts

  16. Uncertainty regarding the law 16

  17. Risk estimation 17

  18. Risk treatment 18

  19. Monitoring 19

  20. Graphical modelling of legal risk

  21. Why visualisation?

  22. Facts lead to risk

  23. Legal norms contribute to risk

  24. Different types of norms

  25. Visualisation of initial example

  26. Case study

  27. Case study • Large industrial contract, long-term commercial relationship • Risk assessment from one contractor’s perspective • Collaboration between lawyers, managers and engineers

  28. Example risk diagram

  29. Case study results • Evaluation • Lawyers were able to prioritize better, based on understanding of factual uncertainty  • Graphical modelling of norms increased understanding by non-lawyers  • Modelling of legal uncertainty: inconclusive • Time consuming! OK for selected large scale contracts

  30. Concluding remarks • Risk management can be usefully applied in a legal context, • as a complement to existing methods • in collaboration with non-lawyers • Graphical modeling may be useful • to achieve a better understanding of facts • to explain legal consequences and simplify the results of a legal assessment

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