In this article, Keeping it legal, we consider the expanding burdens on business from legislation. The legal burden on business continues to increase each year with the introduction of new rules, European legislation and domestic laws. Legal compliance is seen as a significant risk by many business leaders such that a recent MORI poll identified the worst aspect of being a business leader was keeping up to date with legislation. Legislation governs all of our lives and the business world is no different.
Laws control how we employ staff, manage health and safety and protect the environment from our manufacturing activities. Whatever type of business you operate there will be legislation which you must comply with. It is directors who have a duty to keep up to date with legislative changes, as ignorance of the law is no defence!
In order to ensure companies stay within the law resources must be invested in not only identifying applicable laws but also auditing compliance and horizon scanning. Allocating responsibility to an individual employee or team to identify changes in the law which impact on the company’s operations is a good start. They can maintain a legislation register and highlight changes to directors and managers. Trade bodies and government department websites also offer a good source of information on new rules being introduced to specific business sectors. Horizon scanning involves the research of proposed laws which may be in the pipeline and help to ensure the company is not caught off guard.
Undertaking regular risk assessments will help a business analyse the risks it faces and decide how to reduce those risks. When conducting a risk assessment companies must ensure they identify the hazards of the business – contractual, compliance, financial, etc. Risks can be categorised as internal or external. Internally, risks should be considered under the following groups; people risks, process risks and system risks. Externally, there are financial risks and non-financial risks such as political/competitor risk. Once the hazards are identified consider what can reasonably be done to avoid or reduce the risks. If the business has critical contracts review them to ascertain how robust they are. If there are compliance risks consider auditing the internal controls which are in place to prevent breaches. Also make sure that clear reporting lines are established so that there are no information blockages or teams working in silos. Risk assessments should not be seen as a single one off exercise but an evolving activity under regular review. Significant risks could also require expert advice from professionals such as lawyers, accountants or insurers.
if you require advice for your business, please contact one of our team.