| name | legal-risk-assessment |
| description | Assess and classify legal risks using a severity-by-likelihood framework with escalation criteria. Use when evaluating contract risk, assessing deal exposure, classifying issues by severity, or determining whether a matter needs senior counsel or outside legal review. |
Legal Risk Assessment Skill
Assess and classify legal risks using a structured framework based on severity and likelihood.
Important: You assist with legal workflows but do not provide legal advice. Risk assessments should be reviewed by qualified legal professionals.
Risk Assessment Framework
Severity x Likelihood Matrix
Severity (impact if the risk materializes):
| Level | Label | Description |
|---|
| 1 | Negligible | Minor inconvenience; no material impact |
| 2 | Low | Limited impact; minor financial exposure (< 1% of contract value) |
| 3 | Moderate | Meaningful impact; material financial exposure (1-5% of value) |
| 4 | High | Significant impact; substantial exposure (5-25% of value); regulatory scrutiny |
| 5 | Critical | Severe impact; major exposure (> 25% of value); regulatory action likely |
Likelihood (probability the risk materializes):
| Level | Label | Description |
|---|
| 1 | Remote | Highly unlikely; no known precedent |
| 2 | Unlikely | Could occur but not expected |
| 3 | Possible | May occur; some precedent exists |
| 4 | Likely | Probably will occur; clear precedent |
| 5 | Almost Certain | Expected to occur; triggering events present |
Risk Score = Severity x Likelihood
| Score Range | Risk Level | Color |
|---|
| 1-4 | Low Risk | GREEN |
| 5-9 | Medium Risk | YELLOW |
| 10-15 | High Risk | ORANGE |
| 16-25 | Critical Risk | RED |
Risk Classification with Recommended Actions
GREEN -- Low Risk (1-4)
- Accept and document
- Monitor in periodic reviews
- No escalation required
YELLOW -- Medium Risk (5-9)
- Implement specific controls
- Monitor actively (monthly)
- Assign owner
- Brief stakeholders
ORANGE -- High Risk (10-15)
- Escalate to senior counsel
- Develop mitigation plan
- Brief leadership
- Consider outside counsel
- Define contingency plan
RED -- Critical Risk (16-25)
- Immediate escalation to General Counsel / C-suite
- Engage outside counsel immediately
- Establish response team
- Consider insurance notification
- Daily or more frequent review
Risk Assessment Memo Format
## Legal Risk Assessment
**Date**: [assessment date]
**Assessor**: [person]
**Matter**: [description]
### 1. Risk Description
[Clear description of the legal risk]
### 2. Background and Context
[Relevant facts and business context]
### 3. Risk Analysis
#### Severity: [1-5] - [Label]
[Rationale]
#### Likelihood: [1-5] - [Label]
[Rationale]
#### Risk Score: [Score] - [GREEN/YELLOW/ORANGE/RED]
### 4. Contributing Factors
[What increases the risk]
### 5. Mitigating Factors
[What decreases the risk]
### 6. Mitigation Options
| Option | Effectiveness | Cost/Effort | Recommended? |
|---|---|---|---|
| [Option] | [H/M/L] | [H/M/L] | [Yes/No] |
### 7. Recommended Approach
[Specific recommendation with rationale]
### 8. Residual Risk
[Expected risk after mitigations]
### 9. Monitoring Plan
[How and how often to monitor]
### 10. Next Steps
1. [Action - Owner - Deadline]
When to Escalate to Outside Counsel
Mandatory
- Active litigation
- Government investigation
- Criminal exposure
- Securities issues
- Board-level matters
Strongly Recommended
- Novel legal issues
- Jurisdictional complexity
- Material financial exposure
- Specialized expertise needed
- M&A transactions
Consider
- Complex contract disputes
- Employment matters
- Data incidents
- IP disputes
