Risk Management of Legal Issues Affecting E-Commerce free essay sample

Risk Management of Legal Issues affecting E-Commerce Introduction Risk management is the ability to identify, assess, and prioritize risks depending on the threat they poses on a business and the resources available. Most organizations are operating their business online nowadays. Many industries such as banking, insurance, selling of goods, offering of certain services are turning their operations online. E-commerce has many challenges that threaten to make any organization conducting online business to fail. The ability to identify, asses, and come up with solutions to the risks in the e-commerce industry is essential in ensuring success of the organization. One of the major challenges of e-commerce is the legal implications among others. Due to the nature of online business that it is worldwide and that many people can access it, legal matters are a crucial issue in the commerce. E-commerce business is growing rapidly leaving the legal systems in a struggle to adapt to the growing industry. We will write a custom essay sample on Risk Management of Legal Issues Affecting E-Commerce or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Likewise, e-commerce organizations need to come up with new procedures and rules for the business. The growth poses many issues on regulation and many legal questions. How do authorities regulate digital content? Can national laws of a country apply in the web business? Can there be protection of privacy and protection of data in the internet? (Shah, Nagree, 2001) For any of the organizations in the online business, managers need to be aware of the legal issues. Given that for any business, the government tries to impose regulations, managers need to be aware of these regulations to be able to succeed in the business. The e-commerce rapid growth makes the laws to change from time to time to include the changes in the business. Therefore, managers need to be familiar with the changing laws and have a deep knowledge of the law to be able to make the best decisions for the organization in terms of legal issues. Improper decisions when it comes to legal matters can lead to the failure of a business. Non-compliance with the laws may lead to many legal consequences including the government forcing the organization to close or hefty fines, which may lead to many losses leading to the failure of the business. Therefore, the management needs to be aware of the legal concerns of the business to ensure compliance of the law is a daily routine of the organization. One example of the laws on e-commerce that affect the company is copyright laws. The copyright laws pose many threats to the survival of the business. Therefore, the management need to identify these risks, asses them, and develop ways of mitigating them to avoid them affecting the organization largely (Spindler, 2007). The process of risk management involves many other processes. The first process of risk management is to identify the risks. In the case of e-commerce and the copyright issues, the management has to find the risks that copyright issues present to the business. The identification of the risks that copyright issues pose must be at all the stages of the project. When a new product is available, the organization must look at the copyright issues in the first place. When there is a small problem regarding the copyright issues of any product or the website itself, the management must identify the small problem before it becomes a major problem threatening the product. Therefore, any organization must have large personnel for risk identification including a large and informed legal counsel to provide the necessary counsel on copyright issues (Bouridis, 2010). The second step to risk management is analysis of the risk. Analysis of the risk is paramount in making sure that an organization deals with the risk to avoid complications. The analysis involves prioritization, communication with the relevant teams to reduce the threat. In the case of copyright issues, once the team responsible has identified a problem on copyright of a new product, the team must go forward to analyze the real threat that the problem pose to the business. The team must consider other risks and evaluate them thus prioritizing which risk to cover first and which risk can wait. Once the team has identified the risks that need immediate attention, then they can go forward to communicate with other teams responsible for the product. In case the problem is with the website, the team must communicate with the web developers and other parties involved seeking the way forward to address the problem (Shah, Nagree, 2001). The third step to risk management is envisaging the consequences of the actions that an organization takes for a certain risk. The responsible teams must envisage the possible outcomes of any of the actions they take to tackle any problem. A problem with the copyright issues invites for certain actions from the responsible group. The group must look at all the possibilities of the action it takes. By looking at the future possibilities of an action, the group can decide on the best course of action. For example, there might be two actions the responsible group can take to deal with a problem, the group should look at both the actions and decide on the best that will even avoid such problems in the future but not just the action that best solves the problem now (Bouridis, 2010).. The management has to plan for the risk. The steps above call for the planning of risk. Some risks are urgent, others must be immediate, and others essential. All these risks require special attention. Therefore, the management must plan on how to al with the risks depending on their categories. The risks have a varying degree of risk, some have a high risk, others a low risk and others medium risk. The management must plan on how to deal with the risks depending on their degree of risk (Spindler, 2007). The management must also track the risk. The management needs to have a program that evaluates a risk from time to time. Tracking the risk from time to time ensures that the organization has the knowledge of new developments on the risk. The knowledge of new developments on the risk ensure that the organization takes immediate action when necessary for a development that they did not expect in envisaging the consequences that the risk they took for mitigating the risk has (Nasir, 2004). The last step to risk management is control of the risk. The control of risks must go in hand with the management of a project. In case of a new product in the market, the management of this new project must go in hand with the control of the risk that the product poses. The copyright issues of a new product in e-commerce pose risks to the business; therefore, as the management manages the new product, it must endeavor to control the risk that copyright issues pose. The management can do this by planning, and taking sequential preparation to the control of the risk (Shah, Nagree, 2001). Legal Concerns in E-Commerce There are many legal concerns in e-commerce. The major legal issues in e-commerce involve; contracts, security, authentication, privacy protection, data protection, intellectual property rights, domain names, jurisdiction, liability, and taxation. Other legal issues in e-commerce are content regulation, advertisement, electronic payment issues, and foreign direct investment. All these legal factors affect the business in one way or the other. The legal concerns pose risks to the business that may threaten the profits of the company, lead to legal complications, or even lead to the closure of the business. For a business to succeed, any organization that conducts its business online must take special consideration to the legal concerns. The ability of an organization to deal with the legal concerns will be crucial in determining the success of the business. Considering the ever-growing use of the internet for commerce, the legal issues are the major challenge for the e-commerce organizations. The management has to have the knowledge on the legal issues and come up with a plan that will ensure that the organization is able to mitigate these problems (Spindler, 2007). One of the most important legal aspects that an e-commerce organization must take into consideration is the contracts. Parties in that conduct business online must come up with proper ways to reach agreements online to ensure that the contracts are solid. The identity of parties is a major concern in online contracts. The parties mostly do not have prior knowledge of each other posing uncertainties in the authority of the party, legitimacy, and the authority to enter contracts. Although digital signatures are there to help in identifying parties online, different countries have different rules on the digital signatures. Therefore, digital signatures between parties of different countries may bring problems to contracts that they make. Problems in contracts attract legal complications in the organization. The contractual complications may even lead to complications in terms of intellectual and property rights (Bouridis, 2010). Jurisdiction Laws For e-commerce, customers are throughout the world. The law states that if any organization acquires a customer from another country, then the organization must defend the litigation arising from the country. An organization must review any content that it places on the website of its operations to comply with the jurisdiction laws of the country the organization markets, sells, or promotes its goods and services. If the organization does not review the content, a person may sue the organization by the jurisdiction of that other country. Given that e-commerce involves people throughout the world, parties to a contract might come from different jurisdictions. If parties from different jurisdictions make contracts, it might lead to different interpretations of the contractual information. If the parties fail to honor the contract, there might be complications on which jurisdiction the other party should sue. A problem may arise still where the organization does not deliver goods or services as the customer would expect. The customer does not know which jurisdiction to use to sue the organization. The jurisdiction laws is a risk in e-commerce as these legal complications may threaten profits or even lead to total failure of the organization (Silver, 2002). An organization may face action because of its website in form of civil law suits, regulator’s action, or criminal prosecution. Many countries’ courts have a theory in which courts can exercise jurisdiction of the current country if the other party has minimum contacts with the country. The minimum contacts are in form of financial gain, physical presence, election of court through a contract or a stream of commerce. Even if there is no physical presence of an organization in a country, any person can sue you in that country if there are sufficient minimum contacts of the organization’s website with the people (Nasir, 2004).. Privacy and Security Issues In order to promote e-commerce, security is a crucial issue. Most online organizations keep sensitive information on the organization’s websites. The organizations must put in place adequate measures that will help safeguard the sensitive information of their customers. The organization must prevent any intruders from accessing the sensitive information they keep for the customers. The security threats to information in a company might originate both from internal and external. Hackers, Trojan horses, and viruses comprise the risk factors of information from external. Technical staff and other employees comprise the risk from internal. The laws require that all companies have adequate measures to prevent the security threats. There are privacy and security policies that the government imposes on the organization. The ability of an organization to provide high security to the information of their customers is crucial in the success of the organization. Organizations that can guarantee privacy and security of the customer’s information will have a large customer base as they have the trust of the customers. If a person discovers that there is insecurity of his or her information, or the some other person has the information from a website, the person can sue the organization (Silver, 2002). Online Terms and conditions, Policies, and Laws There are many online terms and conditions, policies, and laws by the government and other regulating authorities. Most of the terms and conditions are to shield the organization from liability from the use of the online content by the consumers. Governments are also forming legislation to strengthen the terms and conditions in the websites of organizations. The government legislation aims at protecting the consumers of online content. The legislation also aims at protecting the information of the users. Privacy policies in particular aim to push online organizations to ensure that they have strong security measures to protect the information of the consumers. Thus, the government and other regulating bodies through policies aim to avoid the disclosure of information by organizations through their websites. Policies and laws differ from one country to the other. Therefore, it is a challenge for organizations to comply with the differing policies and laws of the different countries (Sayer Deveaux, 2000). The policies, laws, terms, and conditions on online transactions ensure the following. One is ensuring that there are proper contracts through the internet. Two is ensuring the recording of retention obligations. Three is to ensure control of exchange regulations. Four is ensuring foreign protection of information. Any e-commerce organization ability to come up with proper terms and conditions and comply with policies and laws determines the success of the organization. Poor terms and conditions could lead to legal complications that the organization should not be liable for them. Non-compliance with policies and laws could lead to the authorities taking measures against the organization, which could affect the success of the organization (Sayer Deveaux, 2000). Intellectual property Rights The protection of the intellectual property is paramount in every online organization. The boundless non-regulation nature of the internet causes challenges to the protection of the intellectual property of any organization in the e-commerce business. Intellectual property rights include copyright laws, patent laws, design, trade secret, and trademark among others. Many countries have laws to protect the intellectual property rights but the efficiency of the laws in protecting the intellectual property rights is uncertain. Another challenge of the e-commerce organizations is crossing the property rights of other organizations. The organization need to put proper measures to ensure that no employee crosses the intellectual rights of another organization in conducting the business of the organization (WIPO, 2002). One of the challenges in intellectual property rights of an organization is determination of the subject matter of which to protect. E-commerce business is growing fast and there is advent of technology every day. Therefore, there is emergence of new intellectual property rights posing a challenge to an organization on how to protect its intellectual property best. For example, getting a patent for a new product might require some existing product. The organization might fail to get a way to protect its product best leading to losing information to other organizations through theft. In this case, the organization cannot even sue that other company because it does not have enough legal ground. The new product might require a product that the organization does not produce; therefore, getting patents for the new product might become complicated. The complications in acquiring intellectual property rights of new products that is common in e-commerce poses a risk of the organization losing the intellectual property (Shoniregun, 2000). Another challenge to the intellectual property rights is assertion of originality or novelty. Most of the laws on intellectual property require that the property be original or novel. Most of the web contents are almost similar in nature. An organization must prove to the authorities that the work is original which is hard because of the similarity of the web content. The use of the work in the internet would also hinder the claim of novelty or originality in applying for intellectual property rights. An e-commerce organization has to devote its attention in proving the novelty or originality to avoid infringement by other organizations with similar intellectual property rights. Enforcement of the intellectual rights is another major challenge that e-commerce organizations have. The internet eases the duplication of intellectual property even if they have intellectual property rights protection. The anonymous environment of the internet makes it very hard for an organization to get the infringer. The infringing material is also at a particular location for a very short while, making it even harder for organizations to get the infringer. The inherent territory nature of intellectual property rights makes it hard to determine whether there is infringement or not. The differences in laws of countries makes it hard it hard for organizations to enforce the rights since some action might constitute infringement in one country while the same action does not constitute infringement in another country. To restrain infringement in other countries, the organization has to file cases in these other countries. The process is time and money consuming (WIPO, 2002). Prevention of unauthorized Meta tagging and hyperlinking is another major challenge e-commerce organizations are having. Some hyperlinking constitute infringing of intellectual property rights. Meta-tags constitute infringing of trademarks. Hyperlinks that link an organization’s website to another organizations website constitute intellectual property infringement if the permissions for linking this other organization has not provide permissions for linking. If an organization uses a meta-tag similar to a meta-tag of another organization, this organization infringes on the trademark of the other organization. Recommendations to Mitigate Risks in E-Commerce Organizations After identification and analysis of risks, an organization needs to take the necessary actions to mitigate the risks. The legal issues being a major risk to e-commerce organizations, the organizations need to take the necessary action to mitigate the effects of the same. The intellectual property rights being the factor affecting e-commerce most need special consideration. An organization can take several actions to mitigate the risks. The ability of the organization to mitigate these risks determines the success of the organization (Barr, 2000. One of the ways that an organization can take as a precautionary measure is to have a strong and highly competent legal team. A highly competent legal team ensures that the organization has a strong legal base. A strong legal base is to advise the organization in major legal decisions. To avoid legal complications common in e-commerce organizations, all the decisions must have a strong legal basis evaluating all the possibilities of a particular action (Barr, 2000. The organization must train all its employees on the best practices to avoid legal complications. The organization needs to formulate rules to employees that will ensure that the employees do not perform actions that can put the organization on the wrong side of the law. The employees need to follow all the rules the organization sets in place. The only way to make the employees follow these rules is proper education on the legal issues and the benefits of compliance. To avoid the complications that jurisdiction brings, organizations need to adopt the rules and regulations that look universal. The organization can also place legal personnel in the countries it conducts major business. The personnel in these different countries will ensure that the problems in difference in laws of countries do not affect the organization (Sayer Deveaux, 2000). Organizations need to implement electronic systems like the electronic copyright management system that prevent infringement of intellectual property rights. The electronic systems will help reduce the risks in enforcement of the laws that an organization puts in place to prevent infringement of intellectual property (Barr, 2000). Conclusion Risk management of an e-commerce organization is paramount to the success of the organization. The organizations need proper risk management procedures to ensure that they reduce the risks. Legal issues of e-commerce business are many and require special attention from the management of the organization. Any e-commerce organization needs to consider all the above issues and observe the recommendations to ensure success of the organization and avoid the legal complications. References Barr D. (2000). The Need of a Broad Standard in Global E-Commerce. The Internet Law Journal. Bouridis, D. (2010). E-Commerce Operational Risk Management Plan. n. p. Nasir, A. M. (2004). Legal Issues Involved In E-Commerce. ACM Publishers Sayer, P. Deveaux, S. (2000). Jurisdiction in Cyberspace. IDG News Service Friday. Shah, A. Nagree, P. (2001). Legal Issues in E-Commerce. Nishith Desai Associates Shoniregun, C. A. , (2000). Intellectual Property Rights of Multimedia Enriched Websites. Communication of the ACM: Ubiquity Silver, J. (2002). Legal Issues for e-Commerce Business. Sitepoint. Spindler, G. (2007). Study on the Liability of Internet Intermediaries. University of Salerno. WIPO. (2002). Intellectual Property on the Internet: A Survey of Issues. World Intellectual Property Organization