The colour grey isn’t as cut and dry as black or white, but rather falls somewhere between the two. Using these three colours to define the legalities of business practices, we might say that white represents legal, straight-arrow, by-the-book practices and black represents illegal, unscrupulous and deceptive business practices. And grey? Well, that falls somewhere in the middle. It represents practices that are not illegal but not entirely legal either.
Operating in the Grey Has its Benefits – But Also its Risks
If you’re like most business owners, you only consider “grey” practices if they offer some form of significant benefit to you and your company. Of course, there’s always a flipside. What are the risks associated with grey business practices? Is your company capable of handling the ramifications if it comes to this? Do the expected benefits outweigh the risks?
Managing Risk in Your Business
If we really drill down to the crux of the matter, risk management is a part of every company no matter what the nature of the business or the industry. Depending on what you do, your business may face strategic, compliance, financial, operational, environmental, political, or health and safety risks. Upon acknowledgement of the types of risks your business faces, you may decide to exercise certain measures to minimize those risks such as insurance, protection systems, policy implementations and legislative enactments.
Grey business practices can be viewed as merely another form of risk management. Whether these practices relate to particular forms of taxation, excessive expense write-offs or unrecorded cash deals, you’ll need to evaluate the level of risk they pose to your company.
What’s Worth the Risk and What Isn’t?
This is a question only you can answer. Here are a few things to consider as you evaluate the risk versus the reward:
- What is the nature of the business practice?
- Does it fall way into the grey or only slightly?
- Historically, is this a practice that has resulted in other companies dealing with significant legal repercussions?
- Is this a practice that rarely receives legal attention or has it been the focus of recent investigations?
- Is there a way to minimize the risk associated with this business practice?
- Is your company able to comfortably handle the worst-case scenario?
- What are the risks and what are the rewards? Does one far outweigh the other?
Consult a Professional
Talk to your trusted legal advisor. Gain some much-needed insight from a professional in the field and someone who even may have had direct experience with such matters in the past. This might just make those tough business decisions a little easier.