Introduction: What is Risk Assessment and Why is it Necessary?
Risk Assessment is a proactive process that involves identifying and analyzing potential threats facing an organization. Unlike crisis management, which fights a problem that has already occurred, risk assessment aims to prevent the problem. In Georgia, where the business environment and legislative regulations change rapidly, companies often face invisible legal, financial, and operational risks. This service implies a deep, X-ray diagnosis of the company's activities to determine where the "weak link" is—whether it is faulty contracts, tax violations, vulnerability of intellectual property, or corporate governance flaws. Risk assessment is the foundation for informed decision-making.
What Does This Service Cover?
The risk assessment service is complex and includes several stages:
- Legal Audit: Examining the company's existing documentation (charter, minutes, contracts) for compliance with legislation.
- Operational Process Analysis: Studying business processes to determine where legal liability may arise (e.g., occupational safety, data processing).
- Counterparty Verification: Verifying the reliability and legal status of key partners and suppliers.
- Regulatory Compliance Assessment: How well the company meets licenses and permits established for a specific sector (e.g., construction, pharmaceuticals).
- Risk Mapping: Classifying identified threats according to their probability of occurrence and potential damage.
Common Real-World Scenarios
Risk assessment is particularly relevant in the following cases:
- Before Investment: An investor wants to ensure that the target company has no hidden liabilities or lawsuits (Due Diligence).
- Entering a New Market: A foreign company starts operating in Georgia and needs to know the risks arising from local legislation.
- Structural Reorganization: During a merger or division of companies, to correctly distribute assets and liabilities.
- Expecting a Tax Audit: The company conducts an internal, preliminary check ("Mock Audit") to prepare for a visit from the Revenue Service.
- Concluding a Major Deal: Risk analysis of the terms of a critical contract before signing it.
Georgian Legal Framework
When assessing risk, lawyers rely on Georgia's main legislative acts. The Law on Entrepreneurs establishes a "duty of care" for directors, which directly implies reasonable risk management. Failure to fulfill this duty may become the basis for personal liability of the management. The Civil Code regulates contractual risks, while the Tax Code covers fiscal obligations. Additionally, specific risks (e.g., environmental) are assessed according to the Environmental Assessment Code. For companies operating in the financial sector, it is also mandatory to consider the risk management regulations established by the National Bank.
Service Process
The risk assessment process typically includes:
- Information Gathering: Filling out questionnaires, interviewing management, and requesting documentation.
- Analysis: A group of experts analyzes the received information and compares it with legislative requirements.
- Identification: Revealing specific threats (e.g., "Contract X does not account for inflation risk").
- Evaluation: Determining the severity of the risk (high, medium, low).
- Reporting: Preparing a detailed written conclusion with recommendations.
Why Use Legal.ge?
A correct diagnosis is half the cure. Legal.ge gives you access to experienced lawyers specializing in corporate audit and risk assessment. Through our platform, you can select specialists who have knowledge of your specific industry (whether construction, IT, or trade). Do not wait for a problem to occur—assess and manage risks today with the help of Legal.ge.
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