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Under an increasingly stringent regulatory environment, criminal risks loom like a sword of Damocles over corporate survival and development. Corporate managers must recognise the urgency and importance of establishing robust defences against these risks. This article outlines three key measures: top-level business design; comprehensive risk prevention mechanisms; and demand for criminal legal services.

Top-level business design

Legal and compliant business architecture planning. When planning a business architecture, enterprises should fully consider legal requirements to ensure the legitimacy of their business models and operational processes. For example, when conducting cross-border operations, companies must understand the differences in laws and regulations across various jurisdictions to avoid criminal risks arising from legal conflicts.

Enterprises should also establish appropriate organisational and governance structures, clearly defining the roles, responsibilities and checks and balances among departments. By implementing effective internal oversight mechanisms, companies can reduce non-compliant practices and minimise the risk of criminal liability.

Risk control-oriented business innovation. In promoting business innovation, enterprises must prioritise risk prevention and control. While new business models and products may create opportunities, they can also introduce new criminal risks.

Therefore, during the innovation process, companies should thoroughly assess potential risks and implement corresponding risk prevention measures to ensure that innovation activities occur within a legal and compliant framework.

Emphasising partner risk control. When selecting partners, enterprises must conduct rigorous due diligence to fully understand their credit status, operational performance and legal records. In co-operation agreements, the partner¡¯s compliance obligations should be clearly defined, and they must be required to strictly adhere to relevant laws and regulations.

Risk prevention mechanism

Risk identification and assessment. Enterprises should establish specialised legal compliance departments or employ professional legal teams to thoroughly review each stage of their operations and identify potential risks.

For example, fintech companies may face criminal risks such as unlawful loan issuance, illegal public deposit collection and infringement of citizens¡¯ personal information. By carefully examining business processes, the collection and use of customer data and capital flows, enterprises can promptly detect and avoid potential risk points.

Regulatory framework development. Enterprises should formulate criminal compliance systems that cover all business areas, clearly delineate the responsibilities and authorities of departments and positions, and standardise business operation procedures.

At the same time, they must enhance employee training to ensure familiarity with and adherence to these policies. Enterprises are also required to regularly review the system¡¯s implementation and promptly correct any violations to guarantee effective execution.

Emergency response and continuous improvement. In the event of criminal risks, enterprises should promptly communicate with judicial authorities, co-operate with investigations, actively mitigate losses and reduce negative impacts.

They should also continually improve their risk prevention mechanisms by regularly reviewing and assessing risk prevention efforts, identifying shortcomings and adjusting policies in line with evolving laws and the business environment to ensure that the mechanisms remain efficient and adaptable.

Criminal legal services

In an era of quality growth, corporate managers must recognise that legal services are essentially a matter of cost control. When companies become entangled in criminal matters, they face not only substantial financial losses through fines, confiscations and legal fees but also significant damage to their reputation and operations, potentially leading to irreparable harm.

By strengthening criminal risk prevention, businesses can identify and eliminate potential risks in advance, avoiding criminal conduct and reducing operating costs. At its core, preventing criminal risks is a matter of cost control rather than a mere exercise in embellishment.

Shifting from a cost centre to a profit centre. In procuring criminal legal services, companies should move away from a passive approach and proactively seek legal solutions that add value. Traditionally, legal services have been viewed as an expense to address legal risks and resolve disputes, ensuring normal business operations.

However, this perspective is now outdated, given the evolving market landscape and the development of the legal services industry. When companies focus solely on cost control by seeking the lowest-priced legal support, they often adopt only a defensive stance.

Conversely, by adopting a forward-looking approach to criminal legal services, companies can defend their legal rights, resist unfair competition and standardise internal conduct through measures such as anti-corruption investigations, criminal complaints and negotiations. This approach transforms criminal legal services from a pure cost into a source of value creation.

Leveraging legal services to drive corporate growth. Once a company has embraced the notion of criminal legal services as a profit centre, it should involve criminal lawyers in its decision-making process. By offering innovative legal solutions, these lawyers can help companies protect existing market share and explore new markets to achieve business growth.

This transformation requires not only a shift in managerial mindset but also an enhancement in the professional capabilities of criminal legal service providers. Lawyers must be well-versed in criminal law, have a deep understanding of business dynamics and possess cross-disciplinary expertise and comprehensive service skills.

The transition from a cost centre to a profit centre represents a significant trend in the criminal legal services industry, offering new opportunities for both businesses and legal practitioners and propelling the sector to new heights.

Fan Yun is an associate at Starrise Law Firm