Communicating the message

The first challenge for any business is always to establish that good risk management will in fact deliver value to investors. In some smaller businesses, this first step may simply be to convey the message that risk management means more than just buying the right insurance cover at the lowest possible premium.

By virtue of their experience of working alongside businesses in crisis when risk management has failed, lawyers can contribute significantly to the process. In one exercise in which Beachcroft Wansbroughs was involved, the outcome of an earlier problem was used to demonstrate to senior management how expectations and perceptions developed internally can be shattered by external, judicial analysis. By identifying direct and indirect costs arising from such an experience, it is possible to make a strong financial case for avoiding a repetition. Moreover, re-creating the experience through role-play can help to bring out the non-financial costs of a product or environmental crisis, in terms of both internal and external images of the company and its reputation for good corporate governance.