Law Coursework Essay Paper on Legal Risk Management

Legal Risk Management

 Introduction

Nova Scotia Sailing Charters is a sailboat charter business that operates the sailing excursions and selling of memorable items such as t-shirts and mugs with its business logo to its customers. During the sails, Nova Scotia Sailing Charters will prepare and serve local seafoods to the customers. Ms. Scupper has planned to bring on board a local entertainer on certain excursions to play Nova Scotia songs. During the low season, Ms. Scupper will lease her boat for sea school as a training vessel for students as well as organizing gulf and stay packages for the selected golf courses and resorts along the coast. Ms. Scupper will make proper arrangement with the NS government and the coastal community for permission and authority to tie up his board in the bay while picking its customers. In addition, the business will purchase or lease a van to transport its customers groups to and from the boat.  During the operations of Nova Scotia Sailing Charters, it will face the various legal risks. The paper will prepare and identify the legal risk management plan for Nova Scotia Sailing Charters.

Identification of Possible Legal Risks

Nova Scotia Sailing Charters faces a difficult situation of separating the legal risk from other business risks facing the business. The potential legal risks will obtained from the organizational functional areas, business decisions and the relationships formed by the business. They includes

  • Nova Scotia Sailing Charters should assess the risks associated with the personnel.  Ms. Scupper has employed a number of crewmembers who would help in the business operations.  Legal risks emerge from the process of hiring, employing and terminating the employees (Hull, 2012). Nova Scotia Sailing Charters should employ proper planning and approaches of setting standards for all its employees.
  • Nova Scotia Sailing Charters should also analyze the risks associated with the contracts of leasing and purchasing its equipments. The leasing and purchasing contracts contains terms and conditions set for every transaction (McNeil, Frey & Embrechts, 2010). Any ambiguity regarding the lease and purchase agreements could cause potential legal problems to the business.
  •  In addition, Nova Scotia Sailing Charters would engage in negotiations with the NS government and the coastal community. This exposes the business the legal risk related with the government regulations. Since, failure to adhere to regulations might disrupt the operations of the business.
  •  Another potential risks is that of the customers failing to pay for the seafoods and services offered by the crewmembers.
  • Professional advisors including the accountants and internal auditors may be unable to provide quality services affecting the decision making process.

Evaluation of the Identified Legal Risks

This section assesses the probability of loss and the severity of loss from the potential risks. The first risks associated has a high probability of occurring, but it consequences are not severe. In most occasions, it is difficult to control the actions of the individuals. Thus, the management of Nova Scotia Sailing Charters should design strong internal controls for monitoring the employees. The probability of the contractual risks occurring is low. Most of the lease and purchase agreements are completed in written form. The process of forming the contractual minimizes any possible risks associated with contractual complications. Any contractual problems could result to high severity of the losses incurred (Hull, 2012). The professional advisors could also lead legal risks that have a low probability of occurrence. However, if they occur, the consequences are usually immense. One of the risks with the highest probability of occurrence is the customer’s failure to pay for the foods ordered.

Risk Management Plan for Nova Scotia Sailing Charters

Risk 1:  During the sails, the customers served with food and beverages may fail to pay for their orders. Most of the customers would complain of the quality of the products and services provided by Nova Scotia Sailing Charters.

Action:

Nova Scotia Sailing Charters could provide proper recording of the customers before serving them with the foods. Also, it is useful to consult credit reporting agencies that provides proper checking systems for controlling the level of the customer credits. The usage of standard form contracts would create a temporary responsibility for the customers liable for the transactions.   The claims relating to the quality of the foods served, Nova Scotia Sailing Charters provides for customer service processes and regular feedback system to the customers. The on-time delivery and quick response helps to deal with any customer complaints.

 Risk 2:

 Nova Scotia Sailing Charters employees may fail to deliver the orders made by customers as well as making empty promises to the customers that are not aligned with the company’s service delivery.

 Action:

 Nova Scotia Sailing Charters needs to ensure that all employees are well trained and evaluated to make sure that they follows all set guidelines and policies in the organization. This reduces the cases of ambiguity between the management and employees in enhancing quality customer service.

 Risk 3:

 The presence of regulations monitoring water transport requires that all sailors should put up in place proper waste disposal processes.  The regulation sought to avoid increased cases of water pollution in the sea.  Nova Scotia Sailing Charters is faced with increased expenditures in controlling its business operations.

 Action:

Nova Scotia Sailing Charters should be aware of the local politics and changes in order to avoid any business disruptions. Its involvement in the political affairs contributes to the overall public debate and formulation of coordinated efforts in dealing with regulatory adjustments (Hull, 2012). For instance, if the water transport regulations changes, it would the operations of the company, in which is required to comply with the changes.

Risk 4:

The accountants and internal auditors could make significant errors and mistakes that affect the overall decision making of the managers, owner and employees.

Action:

Nova Scotia Sailing Charters should select its professional advisors properly seeking professional advice from the recognized consulting firms. It should also consider the ability and trustworthiness of its accountants.  Experienced and trust professional advisors enhance financial controls and system preventing further mistakes.

Implementation of the Plan

In order to implement the risk management plan, Nova Scotia Sailing Charters will allocate the various crewmembers to their specific roles and responsibilities.  By allocating the crew roles and responsibilities, it would minimize the risks associated with personnel as well as meeting the set regulations. It has also documented formal procedures appropriate in minimizing the liability from the potential legal risks. In addition, Nova Scotia Sailing Charters will continue monitoring and revising the plan. Ms. Scupper should perform regular review of the company’s operations to determine to identify new risks and the impacts of the existing legal risks.

The monitoring is helpful in providing adequate feedback to the management on the effectiveness of the risk management plan (Chance & Brooks, 2012). Nova Scotia Sailing Charters will also impose strategic polices and requirements to the crewmembers regarding the NS government regulations. The strategic objectives are significant in maintaining a sound risk management environment in the company.  It will maintain good relations with the government as well as other stakeholders reducing the impacts of the various legal risks in Nova Scotia Sailing Charters.

References

Chance, D., & Brooks, R. (2012). Introduction to derivatives and risk management. Boston, MA: Cengage Learning.

Hull. (2012). Risk management and financial institutions,+ web site (Vol. 733).  New York, NY: John Wiley & Sons.

McNeil, A. J., Frey, R., & Embrechts, P. (2010). Quantitative risk management: Concepts, techniques, and tools.  Princeton, NJ: Princeton university press.