From LQWiki

Local policies in the security sense can be thought of as the rules that govern a system or systems. Traditionally, there are AUPs ("acceptable use policies"), TOS ("terms of service") agreements in place (or both) that protect you or your organization from the legal repercussions of actions taken by local users or by crackers who may comprimise your system.

If you haven't taken the time to create these types of policies, you or your organization could be held liable for such things as a malicious user (or a cracker who has compromised one of your machines) launching a DOS attack against another entity.