Legal Risk refers to the potential for financial loss or negative consequences resulting from legal actions, disputes, or non-compliance with laws and regulations. This risk can arise from various sources, including contractual disputes, regulatory investigations, litigation, or changes in legislation that affect an organization’s operations. Legal risk can lead to fines, penalties, and reputational damage. Effective management involves conducting thorough legal reviews, maintaining robust compliance programs, engaging legal counsel for guidance, and implementing risk mitigation strategies to minimize exposure to legal challenges.

Basel scope:

• Pillar 2

Capital requirements:

Mitigated by Capital

Related Links:

•       Basel Framework