Legal and compliance risk: what is the difference and who should manage which?
One of the key deliverables of the project aiming to get into a relationship with a 3rd party is the contract. A contract typically consists of a Master Agreement and exhibits/schedules. Together they are the legal ‘translation’ of all intentions, obligations and requirements of the relationship. Many of the requirements are related to price, quality, governance, intellectual property, exit and a dozen of other topics. The topics I would like to explore in this post is the difference between compliance and legal risk. The reason I think this is relevant is the different departments that typically deal with both types of risk. Not having a clear distinction might thus result in two departments managing and mitigating the same risk or not managing certain risks are all as both assume the other department takes care of it. In more general terms are the following risk categories the most relevant to an outsource relationship (I leave out financial risk, as that is to me the result of any o...