Legal risks are a significant part of a firm’s overall risk profile, and is typically guided by calculating the probability of risk and its potential magnitude. Yet this calcuation does not fully capture how risks manifest for organizations. This chapter presents a novel way of evaluating legal risk termed transformative legal risk management. Transformative legal risk management is different from traditional approaches because it incorporates a new layer of understanding legal risk. Using a four-pronged approach to risk management known as VUCA (volatility, uncertainty, complexity, and ambiguity). This chapter introduces two of the four VUCA risks: volatility and uncertainty. The chapter defines volatility, identifies sources of legal volatility, and presents responses that legal experts can use in response to volatility risk. The chapter then defines uncertainty, identifies sources of legal uncertainty, and presents responses firms can use to reduce uncertainty risk. The chapter shows how firms applying VUCA can not only minimize harm from legal risks but also elevate legal risk management into a practice that generates a competitive advantage over rivals.

Continuing the exploration of transformative legal risk management, this chapter addresses the remaining two risk dimensions that govern a VUCA environment: complexity and ambiguity. Complexity is an environment that contains numerous interconnected parts, accepts inputs, generates outputs, and develops a capacity to learn and remember. The fourth and final dimension of VUCA is ambiguity. Especially challenging for firms deploying legal knowledge, ambiguity is an environment where causes and effects propelling events forward are largely unknown, the firm does not know whether an organized system will emerge, and little historical precedent exists for determining the most appropriate course of action. The chapter defines complexity and ambiguity, explains how they are applicable to legal risk, and articulates strategies for firms to use their legal knowledge to anticipate and address complex and ambiguous legal problems.

Chapter 6 considers how insights from legal risk management, international humanitarian law, strategic intelligence analysis and forecasting might help manage uncertainty and extra-legal biases in the jus ad bellum. The chapter proposes a framework drawing on these fields, using legal and extra-legal expertise to describe the legal and factual context, competing legal theories justifying or prohibiting force, multiple possible interpretations of current facts and future consequences of using or not using force and potential risks that any legal theory is challenged or disproven, and recommending whether to accept these risks and use force, take steps to reduce risks, or not to use force where these risks are too severe. The chapter applies this framework to the Kosovo and Afghanistan interventions, showing that the framework as applied by this author recommends more cautious decisions than those actually taken. The chapter considers how such a framework might have affected UK legal advice on the 2003 Iraq intervention. The chapter concludes that the framework may help address uncertainty and extra-legal intuitions, but does not eliminate the need for judgement, and raises significant normative questions.