Part VII Characteristics of Legal Risk, 23 Definition

Subject(s):

Credit risk

This chapter first reviews the changing perceptions of ‘legal risk’ over the years. It then considers a school of thought that holds that a definition of legal risk is not necessary. It examines the relevance of the definition of legal risk in the allocation of responsibility and effective risk management, impact on policy, responsibility for corporate misbehaviour, advantages of a ‘norm’, and the need for flexibility. Next, it sets out the International Bar Association’s definition of legal risk. The final section deals with the issues raised the employee who ‘goes off the rails’, or the ‘rogue trader’.