Perhaps Donald Rumsfeld put it best when he said, “There are known knowns, things we know that we know; and there are known unknowns, things that we know we don’t know. But there are also unknown unknowns, things we do not know we don’t know.”
Or maybe not.
To be sure, recognition, response and resolution are fundamental goals within the realm of legal risk management. As Rumsfeld was likely getting at—the greatest among these is recognition.
Recognition is the ability to see risks within the business segments of the manufacture and sale of windows and doors before a problem manifests. Success requires a solid understanding in two areas:
- The nature of the operations and products, and
- The legal repercussions of the management choices.
As with many manufacturing enterprises, the legal impact can manifest anywhere from personal injury to regulatory to contractual liability.
Unchecked, the probability that latent risk will become a real or threatened liability dramatically increases in direct proportion to significant growth in business volume because growth in volume is built upon a repetitive reliance on the business’s actions and decisions inherently required for the operation of your business. Many of these choices represent an independent opportunity for loss; more repeated reliance yields greater probability.
For example, if a single unwitting choice to use an inadequate component is repeated in 1,000 products, there is a risk. The manufacture of 1 million products expands the probability of liability by several orders of magnitude. As your company matures, it is important to make the effort to recognize its risks. Stated another way, continued justification of not analyzing your business risk by reliance on the conclusion that “nothing bad has happened” can be foolhardy.
As you grow, the need to address risk becomes more dramatic, but the elements to be considered remain relatively static. Design, procurement, manufacture, certification, instruction, marketing, sales, shipping and service each carry signature risks. The goal is to enable the business leader’s recognition of risk and prompt a consideration of management of them.