risk-assessment

name	risk-assessment
description	Generates structured legal risk assessment reports with categorized risks, 5x5 scoring matrices, and mitigation strategies. Use when preparing risk assessments, due diligence reports, transaction risk reviews, venture analysis, or board-level risk summaries.

Legal Risk Assessment

Produces executive-ready risk reports evaluating likelihood, impact, and mitigation across legal risk categories for business scenarios, transactions, or operational decisions.

Prerequisites

Gather before starting:

• Scenario description — transaction summary, venture details, or decision under review
• Source documents — contracts, term sheets, regulatory filings, corporate records
• Organizational context — industry, jurisdiction(s), risk tolerance, strategic objectives
• Known constraints — timeline, budget, regulatory environment, stakeholder concerns

Workflow

1. Document Review

Extract from all provided materials:

Element	Look For
Obligations & duties	Performance requirements, deadlines, conditions precedent
Representations & warranties	Scope, survival periods, indemnification triggers
Financial exposure	Stated amounts, penalties, liquidated damages
Jurisdictional issues	Choice of law, forum selection, regulatory bodies
Notice & cure provisions	Timelines, methods, non-compliance consequences
Ambiguous or silent terms	Missing definitions, unclear risk allocation, gaps

2. Risk Identification

Categorize all material risks:

Category	Key Inquiry
Regulatory compliance	Licensing, permits, reporting, pending rule changes
Contractual liability	Breach exposure, indemnification chains, liability gaps
Litigation probability	Dispute history, enforceability, venue risk
IP vulnerability	Ownership disputes, licensing gaps, infringement exposure
Employment & labor	Classification, non-competes, WARN Act, benefits
Tax implications	Structure-dependent exposure, transfer pricing, nexus
Reputational & governance	Fiduciary duties, disclosure obligations, ESG

3. Risk Scoring

Rate each risk on a 5x5 matrix. Rating = Likelihood x Impact.

Likelihood: 1 Remote — 2 Unlikely — 3 Possible — 4 Likely — 5 Near certain

Impact: 1 Negligible (<$50K) — 2 Minor ($50K–$500K) — 3 Moderate ($500K–$5M) — 4 Major ($5M–$50M) — 5 Severe (>$50M)

Thresholds: Low (1–6), Medium (7–12), High (13–19), Critical (20–25)

4. Mitigation Strategies

For each Medium/High/Critical risk, propose mitigations and assess feasibility, cost, and residual risk:

Strategy	Examples
Eliminate	Restructure transaction, remove problematic terms
Transfer	Insurance, indemnification, contractual risk allocation
Reduce	Compliance protocols, enhanced due diligence, reps & warranties
Accept	Document rationale, establish reserves, monitor triggers

5. Gap Analysis

Flag explicitly:

• Missing documents or facts affecting risk precision
• Unsettled legal standards or pending regulatory changes
• Recommended due diligence steps or expert consultations

Output Structure

## Executive Summary
- 3–5 sentence risk posture overview
- Top 3 risks with ratings
- Go / No-Go / Conditional recommendation

## Risk Matrix
[Table: Risk | Category | Likelihood | Impact | Rating | Key Driver]

## Detailed Risk Analysis
### [Risk Category]
#### [Specific Risk]
- **Exposure**: factual basis with document references
- **Legal basis**: applicable statute or case law
- **Likelihood rationale**: enforcement trends, precedent
- **Impact quantification**: dollar range, operational consequences
- **Mitigation options**: ranked by effectiveness

## Information Gaps & Limitations
[Bulleted list with recommended next steps]

## Recommendations
- Numbered, actionable items tied to specific risks
- Prioritized by risk rating and feasibility
- Decision framework: proceed / modify / decline

Checks

• Reference specific contract sections, statutes, and facts — no generic risk language
• Quantify exposure with dollar ranges; acknowledge uncertainty explicitly
• Calibrate recommendations to the organization's stated risk tolerance
• Distinguish deal-breakers from commercially acceptable risks
• Mark unverifiable authority with [VERIFY]
• Do not minimize risks to favor a preferred outcome
• Note jurisdiction-specific variations where U.S. state law divergence is material
• Keep the executive summary accessible to non-lawyers