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Paralegal burnout is a state of chronic physical and emotional exhaustion caused by prolonged workplace stress, excessive workloads, and feeling overwhelmed by repetitive administrative tasks. It often leads to decreased productivity, job dissatisfaction, and high turnover rates in legal teams.

Paralegals are under an enormous amount of pressure. They work extremely long hours, and they’re often responsible for managing the office, corporate records, filing systems, and minute book updates. In some cases, paralegals must even manage the time of the lawyers whose cases they support.

Key Signs of Paralegal Burnout

Watch for these warning signs that a paralegal may be experiencing burnout:

• Chronic fatigue and exhaustion that doesn’t improve with rest
• Decreased productivity and difficulty concentrating on tasks
• Increased cynicism or negativity about work and colleagues
• Physical symptoms such as headaches, insomnia, or frequent illness
• Emotional detachment from clients and cases
• Feelings of ineffectiveness despite working long hours
• Dreading coming to work or frequent thoughts about quitting

Paralegal burnout is bound to happen for many legal professionals. Everyone has their limit, and sometimes people just simply need a break. But when paralegal burnout does occur, it also robs firms or in-house counsel of exceptionally great talent.

So how do you help your talented paralegal team avoid feelings of burnout? What are some alternative methods to reduce clerical work and lift some of the pressure off their shoulders?

Common Causes of Paralegal Burnout

If feelings of burnout become overbearing, it’s not uncommon for paralegal turnover rates to skyrocket. Here are some of the main reasons why paralegals feel burned out in their professions.

Inefficient minute book documentation

According to the 2021 Legal Trends Report, the average attorney (including paralegals) bills only 2.5 hours of an 8-hour day to clients. That means nearly 70 percent of an attorney’s or a paralegal’s day is spent managing administrative or clerical work. Paralegals are more likely to be wrapped up in documentation than the practicing attorneys themselves.

Most of these minute book processes are inefficient and outdated. These archaic workflows are part of the reason that paralegals are unable to dedicate more of their own time towards client services. The more interesting parts of legal work are rare experiences for paralegals swamped by arduous corporate documentation processes.

Excessive critique of their work

All documents submitted in court filings or directly to judges are placed under meticulous scrutiny. Attorneys know exactly what they want documents to say when submitted as evidence in any case file. That means there’s very strict and sharp criticism towards the structural integrity of the documents, and those criticisms fall directly upon the paralegal.

Dana Medley-Vogel has been a paralegal for over a decade. She’s had plenty of firsthand experience with criticisms of her submitted documentation. She encourages any new or experienced paralegal to learn how to let those criticisms go and avoid taking it personally.

“It doesn’t mean you didn’t write it well — it means that the attorney may have something different in mind. Or, sometimes you start something and they change their mind by the time you finish it. For some people, that’s very difficult.”

Lack of authority to make decisions

It’s not always the case that people are constantly managing up so they can grow in their careers. But many paralegals do aspire to become fully licensed attorneys. They want to have more input on client relations and charge higher billable hour premiums. They want the authority to call their own shots.

One of the main limitations for paralegals is that it’s their primary duty to ensure all minute books and corporate records are properly documented. When the caseload piles up or attorneys are constantly changing priorities, it’s very difficult to get through all of that paperwork. Paralegals see their dreams slip further and further away, contributing to symptoms of burnout.

Why Manual Tools and Spreadsheets Make Burnout Worse

Many legal teams still rely on spreadsheets, shared drives, and manual tracking systems to manage corporate records and minute books. While these tools may seem cost-effective, they actually accelerate paralegal burnout in several ways:

• Version control nightmares — Tracking which spreadsheet is the “correct” version wastes hours and creates anxiety
• Manual data entry — Copying information between documents introduces errors and tedious rework
• No automation — Every deadline, filing, and update must be manually tracked and remembered
• Difficult collaboration — Sharing files via email chains creates confusion and duplicated effort
• Compliance anxiety — Without automated reminders, paralegals constantly worry about missing critical deadlines

Consider Sarah, a paralegal at a mid-sized law firm managing corporate records for 50 clients. She spends her Monday mornings cross-referencing three different spreadsheets to check for upcoming annual filing deadlines. By Wednesday, she discovers a colleague updated a different version of the master spreadsheet, and now she has to reconcile the differences. On Thursday, a partner urgently needs a shareholder agreement from 2019—she spends two hours searching through mislabeled folders before finding it. By Friday, Sarah is exhausted, frustrated, and questioning whether she made the right career choice. This cycle repeats every week.

How MinuteBox Helps Reduce Burnout for Paralegal Teams

Since documentation and endless piles of paperwork are among the biggest contributors to paralegal burnout, investing in a solution that simplifies the whole workload can make a transformative difference.

MinuteBox is entity management software that helps paralegals sort, file, tag, and organize minute book records in a digital cloud-based solution. The technology provides a single source of truth—one minute book room with infinite storage capacity. Cloud-based servers host all important corporate documents, creating a convenient and secure way to manage the minute book records.

Simply feed all your minute book records into professional scanners. The platform automatically populates these records in the cloud, structuring them in the form of standard PDF-style documents. The servers are protected by biometric and hardware key authentication that’s restricted to only those members of the legal team who have authority to access the account.

Key benefits that reduce paralegal burnout include:

• Automated compliance calendars that track deadlines and send reminders
• Instant document search that finds any record in seconds
• Single version of truth eliminates spreadsheet confusion
• Secure client portals for easy document sharing
• Automated workflows that reduce repetitive manual tasks

Suddenly, the time a paralegal spends searching and sorting through records becomes a fraction of what it once was. If clients have questions about their minute book records, the answers can be found and shared within a matter of minutes. Paralegals can subsequently spend more of their time on aspects of the job, like client relations, that they most enjoy doing.

Entity management platforms help attract and retain talent

People are excited about innovative companies. They feel a drive and attachment to brands that promote more innovative methods of getting things done.

Entity management platforms are the innovative solution to modernize minute book management. By helping firms streamline how they manage client records, the technology helps paralegals and practicing attorneys alike make more efficient use of their schedules.

If your firm can promote itself as an innovative company that minimizes the amount of time spent on documentation, you have a leg up on attracting and retaining top quality talent. Give those innovative go-getters a reason to consider your firm by investing in technology that saves valuable working hours on corporate record keeping. You’ll attract great paralegals and help them avoid the conditions that spur burnout.

Modern technology has dramatically changed the legal industry. Today’s legal professionals have more flexibility to undergo discovery, undertake research, commence depositions, and manage minute book records for multiple cases.

The best solutions enable professionals to streamline common workflows and operate more efficiently. Streamlined workflows equate to significant time savings, particularly for paralegals and law clerks whose primary duties revolve around clerical and administrative tasks to support the interests of their respective firms.

What accelerated the adoption of new legal technologies?

One of the accelerants that fueled the adoption of innovative legal technologies was the COVID-19 pandemic. Confined to home environments and locked out of their offices, paralegals were no longer able to conduct their duties in the traditional sense.

According to MinuteBox co-founder Sean Bernstein, in an interview with Canadian Lawyer, the pandemic forced firms to introduce innovative legal technologies to their workflows, because there were no paralegals at the office to get legal talent answers to their clients’ questions.

“In COVID times, that’s the one thing they couldn’t do. And as a result, their clients suffered, their work product was delayed, and they couldn’t deliver what was necessary in order for them to have a good legal practice.”

What purpose does legal technology serve for legal talent?

Legal documentation is one of the most time consuming and repetitive processes in any operating firm. In many cases, clerical and administrative work can actually get in the way of client relations and billable hours. In fact, the average lawyer bills just 2.5 hours in an 8-hour workday, amounting to only 31% of their professional time.

It’s not just law firms that struggle with an abundance of clerical work. According to EY Law and the Harvard Law School Center on the Legal Profession, a survey of 2,000 business professionals, 87% of corporate general counsel say their departments spend too much time on clerical duties and legal documentation.

During the pandemic, many professionals acknowledged their need for a unified minute book management process that was more efficient, flexible, and autonomous. According to Sean, this drove firms to consider document automation solutions that functioned within the digital cloud.

“There is now the belief that things not only should change but need to change, and that feeling is coming not just from legal innovators but also from the law firms. They recognize that in every circumstance, service needs to be delivered in different ways. And in many ways, it needs to be delivered in a better way to ensure the client experience.”

How document automation software improves paralegal workflows

So how can document automation software improve paralegal workflows and enable legal departments to function more efficiently? Here are the four main ways that legal departments are becoming more streamlined thanks to document automation solutions.

Reduces laborious time spent on clerical work

The biggest advantage of document automation software is the time savings it delivers to firms. Document automation software is an intuitive innovation, automatically generating structured PDF-style minute book records when new client data is uploaded into the platform.

Instead of combing through individual files to organize the minute book, the software does all the organization for paralegals. Suddenly, a process that once took several hours for each client case file can be fully automated and completed in a matter of minutes.

No code document assembly means no technical expertise required

Sometimes, companies are slow to adopt innovative technologies because they lack the technical expertise to manage those solutions. Law firms and corporate counsel no longer have any need to fear document automation technology since it’s built to serve the non-technical legal professional.

This is a feature that MinuteBox has perfected and that few other document automation solutions can deliver. No-code document generation easily creates and customizes legal documents without the need for a trained developer. The platform is intuitive enough to generate those organized minute book records without human technical assistance. All your paralegals have to do is simply upload the data, and the platform will do the rest.

Built-in automated compliance module helps firms follow the letter of the law

Law firms or in-house general counsel are often tasked with creating a compliance program. The sequences involved in creating a compliance framework are also time consuming, and enforcing the policies requires diligent management by legal professionals.

Using a document automation solution, the platform’s built-in compliance module monitors all entity data for any errors and statutory non-compliance risks. This extends to monitoring organizational charts, calendars, workflows, date-based compliance tasks, and other templates that could derail the effectiveness of a compliance program.

The penalties of non-compliance include stiff financial penalties for the business entity, as well as potential jail time for the executives and directors who permitted non-compliance. Document automation software helps your legal team enforce compliance and protect the business.

Efficient workflows empower paralegals to deliver greater client service

When paralegals are no longer spending up to 70% of their working days on clerical work thanks to document automation software, more time is available to work directly with clients on their case files. Client service is essential to boosting client retention rates and improving Legal Recurring Revenue for a firm.

Since document automation software like MinuteBox is a cloud-based solution, paralegals can also service clients from locations of their choosing. Granting clients access to the digitized documents in the platform allows them to view the records from remote locations. Service is far more convenient when clients aren’t required to visit law offices to discuss their cases.

A compliance calendar keeps track of all your legal entity’s important filings. Compliance records include things like key filing dates, organizational charts, compliance workflows, as well as templates to monitor errors, statutory non-compliance, and date-based compliance tasks.

The purpose of a compliance calendar is to help organizations avoid subjection to the penalties of non-compliance. Compliance calendars and their corresponding workflows are central pieces of a business entity’s corporate compliance program. These programs reduce risk and protect entities from the legal and financial consequences of non-compliance.

Entity management software includes compliance modules

Compliance calendars and workflows are vital to the legal security of global corporations. Having a resource that simplifies compliance workflows is a valuable business investment. It protects corporate interests and makes legal and compliance teams more efficient.

Entity management software is the solution to more effective compliance management. Platforms like MinuteBox are intuitive systems that help legal and compliance teams streamline the entity management and compliance process. Your team can use the platform’s built-in compliance modules to track all important records and maintain compliance for all corporate entities and subsidiaries in one convenient location.

This is one of the biggest strategic advantages of investing in entity management software. All legal entity data is safe and secure within the platform, streamlining the process of maintaining compliance in global markets.

Additionally, as a cloud-based solution, your compliance team can grant access to fellow stakeholders regardless of geographic location. If any questions about the compliance records are raised, any stakeholder can log in and get instant answers to their questions. It makes entity management and compliance workflows more streamlined, more efficient, and more effective.

Strategic business benefits of compliance calendars

Now that we’ve outlined the best approach to implement a compliance program, what are the business benefits of implementing a more efficient compliance workflow? Here are five of the top business reasons why your corporation should invest in resources to maintain compliance.

Compliance calendars secure valuable organizational data

Safeguarding organizational data has never been more important. Cybersecurity breaches make international headlines, and they risk tarnishing corporate brand reputations.

If the compromised data includes any personal customer information, your entity could be subjected to massive financial penalties from regulatory bodies like the EU’s GDPR. The GDPR organization is very strict with their enforcement of privacy protection laws, subjecting Meta Platforms (parent company of Facebook) to a collective $3 billion in corporate fines for breaches of customer privacy.

Compliance calendars within entity management platforms protect all sensitive data behind biometric and hardware key authentication security parameters. The security measures are a stop-gap to restrict access to all sensitive data and maintain compliance with the laws.

Transparency and accountability are propped up by compliance calendars

More often than not, lapses in completed compliance tasks are due to forgetfulness rather than malicious intent. However, if those tasks are part of a compliance workflow sequence, one slip-up can cause the whole workflow to fall apart.

Compliance calendars include date-based compliance tasks that remind each stakeholder of when their responsibilities are required for completion. The platform uses prompted error messages to remind users when a compliance task remains incomplete. This workflow ensures everyone remains accountable, and that there’s consistent transparency across the corporation.

Become more adaptable if regulatory requirements are amended

Like many things in life, compliance regulations are constantly subject to change. Governments pass new laws or amendments to existing policies that can change how your corporate entity remains in compliance.

It’s normal for most entity managers to be so wrapped up in their day to day tasks that they fail to pay attention to government updates. Getting caught flat-footed in the face of new compliance regulations is normal, but it can be avoided with compliance calendars.

Storing data within compliance calendars means half your workload is already done. If regulators change compliance requirements by demanding new information from your business, you already have all the legal entity data you need to remain in compliance. Be proactive and you can be adaptable when the times call for it.

Improve coordination with subsidiary compliance managers

Global business entities usually have multiple subsidiaries under their corporate umbrella. Every one of these organizations must remain in compliance with jurisdictional laws to avoid any penalties that threaten the future of those subsidiaries.

Sometimes, a subsidiary needs vital information from your parent entity to remain in compliance. Using entity management software’s compliance modules, subsidiary compliance managers can easily access the information they need in one secure location. It allows compliance tasks to get completed quickly and avoids disrupting parent compliance teams from their day to day workflows.

Compliance calendars help your entity prepare for audits and reports

Another way to be proactive through compliance calendars is through preparation for worst case scenarios. Government agents can flag any corporation for an audit if legal and financial data raises any red flags with regulators. Compliance calendars ensure all corporate data is accurate, reducing the risk of an unwanted audit.

In the off-chance that your corporation is flagged for an audit, your compliance calendar makes it easy to generate reports for auditors. All your data is protected by entity management security measures, allowing you to quickly generate a report with all legal entity data instantly. You can give auditors the answers they need to complete their review and protect your business from stiff legal or financial penalties.

Create corporate compliance programs and embrace security

It makes logical business sense to be proactive with corporate compliance. Take measures to protect your legal security by investing in resources to help you build an effective corporate compliance program.

That’s the security and peace of mind you achieve by using MinuteBox’s leading entity management platform. You can protect your corporate interests, improve operational efficiencies, and maintain compliance without risk of legal or financial penalties. Join the MinuteBox revolution and take one step closer to modern corporate compliance.

Legal professionals use entity management software to manage corporate governance, compliance matters, and sensitive legal information. The software simplifies entity management by automating many clerical and administrative tasks. Legal talent can manage minute book records more efficiently and use their own working time more productively.

One of the biggest and often overlooked benefits of entity management software is how it becomes a single source of truth for entity management data. This is a very practical asset that helps streamline workflows while facilitating more effective communication with stakeholders.

Here’s why creating a single source of truth for your legal entity data improves how your legal department operates.

Why you need an automated entity management system

In traditional legal departments, professionals were inundated with binders upon binders that contain legal entity data. Imagine the tediousness of combing through all those binders to file, sort, and update records. It’s an outdated workflow, especially when legal entity management technology is available to automate matters.

Using an automated entity management system, clerical duties become more streamlined. Simply open the platform, drag and drop from pre-selected fields, and populate those fields with the appropriate legal entity data. The platform intuitively interprets the data and populates a minute book record with all the appropriate information. The record is automatically filed, sorted, and available for review.

How single sources of truth for legal entity data are assets

Your entity management system becomes your single source of truth for all legal entity data. It’s a powerful asset that helps your legal department manage minute book records, maintain compliance, and protect all sensitive entity data behind advanced security parameters.

Use a single source of truth to comply with regulatory audits

No corporate entity wants to be subjected to a regulatory audit, but it’s crucial to be prepared for a surprise review from regulatory agents. Should an auditor arrive at your corporate offices, you need to provide clear transparent records for that agent to review.

Since entity management systems function as a single source of truth, you can provide detailed reports to auditors whenever the need arises. Simply pull up information about your corporate entity data within the platform, and walk through the records in question with the auditor.

The platform’s advanced search capabilities enable your legal talent to pull up records in just a few seconds. If auditors have questions, your single source of truth can provide the answers.

Use a single source of truth to maintain compliance with the laws

Maintaining compliance with regulatory laws ensures your corporate entity avoids financial or criminal penalties of non-compliance. Corporate compliance programs ensure the proper protocols are followed to maintain compliance.

As a single source of truth for all legal entity data, you can build and manage your corporate compliance program directly within the platform. Advanced legal entity management systems like MinuteBox have built-in compliance frameworks that walk your legal team through all the steps and sequences to maintain corporate compliance.

Use the compliance framework to create your organizational charts, calendars, workflows, and other templates to flesh out your compliance program. The framework uses prompts and notifications to alert you of any errors, statutory non-compliance, and date-based compliance tasks that may be lacking. You can follow the letter of the law and always remain in compliance.

Use a single source of truth for transparent stakeholder communications

Every corporate entity has executive leaders, boards of directors, and invested shareholders. Each one of these respective parties has a vested interest in the legal integrity of the corporation.

Legal teams are frequently subjected to pressing questions and inquiries from stakeholders at various levels. Managing the concerns of each stakeholder can be a taxing process without the right solutions to simplify how those concerns are addressed.

Using your single source of truth, your legal team can grant exclusive access to stakeholders who are authorized to view legal entity data. If any concerns arise, your legal team can host a private or shared meeting with one or more stakeholders to address pressing inquiries without ever leaving the platform.

As a single source of truth, entity management software enables speedy and transparent communications between all stakeholders. It also eliminates the potential for conflicting information and misunderstandings that cause unnecessary problems for your legal team.

Create a single source of truth for all your legal entity data

Entity management systems automate the process of managing multiple records of legal entity data, saving valuable time and resources on clerical and administrative work. As a single source of truth for all legal matters, these solutions also help facilitate diligent recordkeeping, frameworks to maintain compliance, and transparent communications with all relevant stakeholders.

Join the MinuteBox revolution today, and you can empower your own legal department with a single source of truth to manage all pressing legal concerns.

Since the 1970s, corporate governance has been a measure demanded by regulators to hold business entities and their leadership accountable. At the heart of corporate governance policies are efforts to instill greater ethical and transparent practices that corporations abide by when they operate.

Corporate governance trends have steadily evolved over the years, leading to the enactment and disregardment of specific policies. What remains consistent is a collective effort to maintain responsible governance practices that reflect modern times.

Current corporate governance trends

Some examples of historic corporate governance trends include integrations of governance, risk management, and compliance (GRC) policies to create legal and ethical protocols for businesses. GRC frameworks set benchmarks for responsible business mandates and enable organizations to adapt GRC processes when circumstances require them.

What are some of the top corporate governance trends impacting business entities in 2023 and beyond? Here are some of the most important considerations.

Current Trend #1: More enforceable ESG protocols

Corporate responsibility is a broad term that has taken on numerous meanings over the years. Most recently, corporate responsibility is shaped by an entity’s environmental, social, and governance (ESG) protocols.

A recent study by IBM determined that 70% of workers are attracted to companies with viable ESG programs. Where business was once solely about increasing revenue and driving growth, it’s since evolved into a more complex system. Today, shared social values between owners and employees give responsible business entities chances to recruit top talent to join their ranks.

Current Trend #2: Shareholder use of the universal proxy rule

ESG protocols reflect progressive corporate cultures, but boards of directors face even more pressure to enact responsible corporate governance. The Security and Exchange Commission (SEC) enacted a universal proxy rule to enforce greater transparency at annual corporate shareholder meetings.

Before the enactment of the universal proxy rule, shareholders could send separate proxy cards instead of attending annual meetings that list nominees to the board of directors. The general counsel struggled to organize management and shareholder nominees through multiple proxy cards, limiting transparency and accountability amongst board members.

The universal proxy rule requires all participants to list their nominees on one universal proxy card. The proxy rule is triggered when a member of the board solicits 67% of a company’s shareholders to enact a new nomination procedure. Shareholders can select the nominees they prefer regardless of who nominated them. The universal proxy card organizes nominations in a more structured format, creating diligent minute book records of shareholder meeting minutes.

Current Trend #3: Economic uncertainty impact on GRC strategies

Throughout the year, global inflationary pressures have forced central banks to instigate sharp increases in central interest rates. Rising costs placed added pressure on corporate managers and directors to maintain growth in an increasingly unstable economic climate.

While much of the world is now expected to avoid a painful recession, that doesn’t calm the uncertain waters. Corporate entities must review their risk management protocols and continue adapting to the uncertainty hanging over prospects for growth. Failing to heed risks to effective corporate governance until too late threatens to undermine growth forecasts.

Current Trend #4: Greater C-suite oversight from boards of directors

Income inequality has always been a concern, but it’s rapidly emerged as one of the most trying social issues of our time. In Canada, for example, Canadians are outraged that grocery chain CEOs are making record profits and lucrative bonuses, all the while food prices grow increasingly more expensive with no relief in sight.

Shareholders will hold C-suite leadership to greater scrutiny and accountability regarding key decisions and executive compensation. Greater oversight over corporate management will help enforce responsible governance, ethics, and accountability to limit the risks of public outrage over so-called unfair business practices.

Emerging corporate governance trends

In addition to current emerging trends, corporate entities must prepare for emerging matters that will impact corporate governance in the future. Here’s a quick overview of what issues will influence responsible corporate governance in the future.

Emerging Trend #1: Disruptive nature of AI

Artificial intelligence is impacting how businesses operate at all levels. As ongoing breakthroughs in AI capabilities continue to emerge, businesses must remain vigilant and adapt corporate governance protocols accordingly.

Emerging Trend #2: The role of business ethics

The example of grocery chain CEO compensation against the backdrop of increasingly unaffordable food costs for Canadians is a prime example of an ethically irresponsible practice. Public backlash tarnishes brand reputations, limiting opportunities to boost revenue and grow business. Expect ethics to play an increasingly important role in responsible governance.

Emerging Trend #3: Streamlined reporting structures

Corporate stakeholders must maintain oversight over all business operations. Yet many reporting systems are very outdated and complex, making it difficult to make fast efficient decisions about business policies. Corporations will require modern solutions like entity management software to centralize, consolidate, and streamline entity reporting data.

Emerging Trend #4: Modern talent acquisition strategies

Economic uncertainty won’t last forever, and companies will need to acquire the next wave of talent to foster future growth. Cultivating a corporate culture built around responsible governance, ESG policies, and values-based decision-making will help attract progressive-minded workers to join the ranks.

Use entity management software to support responsible governance

Creating and adapting corporate governance programs helps companies maintain their reputations, reduce risks, and cultivate reasonable growth prospects. Enforcing responsible governance requires a system that organizes and standardizes all GRC and ESG protocols.

Entity management software is one of the best systems for creating structured governance protocols. Entity management software functions as a single source of truth, giving stakeholders clear insight into the current state of the business.

All reporting data is stored within organized minute book templates. Additionally, you can build detailed organizational charts, cap tables, and shareholder ledgers directly within the entity management platform. Use this information to create a governance structure that encompasses current governance trends and allows you to adapt to emerging trends coming down the pipe.

Ready to organize your corporate governance in a more responsible and structured manner? Join the MinuteBox revolution and gather all reporting data into one location. Use that structure and convenience to enact responsible corporate governance across your organization.

Enterprise risk management (ERM) is an organizational strategy to identify and mitigate risks to a corporation’s legal, financial, and operational objectives. An ERM strategy allows key stakeholders to assess risks to the corporate entity. Using the results of these assessments, department heads determine the best course of action to mitigate risks.

Creating a diligent ERM framework creates awareness throughout the business about risks posed to corporate governance, legal compliance, and business profitability. Utilizing technology, such as entity management software, creates a centralized source of truth for all aspects of the risk management strategy. Stakeholders inquiring about the plan can refer to the platform for answers.

What is the purpose of an enterprise risk management plan?

An effective ERM strategy takes a holistic approach to managing risks throughout the corporate enterprise. Risk managers use an ERM plan to minimize risks while also identifying opportunities to improve operations.

Innovative or efficient workflows can improve, for example, how legal or financial data is reported to corporate executives and directors. When analyzed using the corporation’s ERM strategy, these new efficiencies can streamline business costs while preserving effective risk management.

What risks does an ERM framework address?

Anything that threatens the legal or financial integrity of a business is classified as a risk. However, most corporate risks can be classified into one of the following categories.

Corporate compliance

Corporate compliance risks are any actions taken by a company that violate jurisdictional laws or regulations. As an example, failing to produce annual financial statements to authorities within established timeframes risks violating compliance.

Take note that there are differences between compliance and ethical risks. Violations of compliance policies could subject the corporate entity to serious financial and, in some cases, criminal penalties. Ethical violations may be classified as legal, though they reflect poorly on responsible governance and the brand reputation.

Legal matters

Similar to corporate compliance, general legal risks threaten a corporate entity with substantial financial repercussions. A prime example of a legal risk is a contractual dispute with a vendor or third-party affiliate that results in a lawsuit brought against the corporation.

Business strategy

Changes in global economic conditions threaten the overarching corporate strategy of the business. These risks are largely beyond the control of the corporation, so having a thought-out ERM strategy enables your business to change course against troubling economic headwinds.

Business operations

Similar to economic instability, some unexpected risks affect global operations. For example, disruptions to the global supply chain, fueled by events like the ongoing war in Ukraine, have hindered business activity throughout the world.

Data security

Data security has always been an important part of any ERM framework. In recent years, the rise of invasive and disruptive cybersecurity data breaches has only accelerated the global need for robust data security measures. Ensure your ERM framework directly addresses cybersecurity and balances this matter with the cost of not improving data security protocols.

Financial performance

Of course, no risk management plan is complete without considering risks to financial performance. Anything that increases corporate debt or reduces profits is a risk to business growth and must be appropriately considered within your ERM framework.

5 components of an effective ERM framework

Now that we’ve identified areas in which an ERM strategy best serves your corporate entity, what are the key components of an effective ERM framework? Generally speaking, there are five important ways to build and maintain an ERM plan.

Risk identification

The first step is to identify the risks to your business. Assess the costs to your corporation from each identified risk so that you can evaluate proper solutions to mitigate those risks. Then, determine the cost to implement those solutions so that you can develop enterprise risk management in a structured manner.

Risk ownership and response

The second component of your ERM framework is to determine which stakeholder is responsible for mitigating risks in a particular aspect of the business. Assigning risk ownership to the appropriate leader ensures matters are not overlooked and solutions are implemented.

Risk control policies

Next, determine how you will solve matters of risk to the business structure. A great example of how to do so lies within compliance risks. By using entity management software, you have access to built-in compliance frameworks that use modules, wizards, and prompt notifications to enforce strict compliance throughout the organization. If there are any gaps in reported compliance data, the platform alerts users of these gaps so that corrective action can be taken.

Risk monitoring and reporting

Upon selecting viable solutions to manage corporate risks, set in place a process to monitor and report any subsequent risks. Start by creating ERM objectives and the list of stakeholders who are assigned responsibility for certain aspects of risk. Then, create a risk registration workflow that allows risk managers to monitor any deviations from the established framework.

Risk assurance

Finally, as proper monitoring and reporting structures are implemented, establish a process that allows business leaders to evaluate all reporting data. Use the takeaways from those reports to assess and continuously improve the ERM framework so that you’re constantly controlling risks to the corporation.

Use entity management software to help minimize risk

Solutions like entity management software are a boon to organizations that desire a structured approach to risk management. All reporting entity data is stored within cloud-based servers that are backed by biometric and hardware key authentication solutions. Join the MinuteBox revolution today and take your corporation one step closer to effective risk management.