Part VII Characteristics of Legal Risk, 25 Causation

Subject(s):

Credit risk

This chapter first considers the relationship between the sources of legal risk considered in Chapter 24 and the causes of loss attributable to legal risk identified in the International Bar Association definition. Whereas the sources describe the social circumstances that cause legal risk to arise, the definition is concerned with how an institution, when faced with a legal risk-originated problem, should answer the question: how did this happen (or how can we prevent this happening)? Consideration of the sources helps us to understand why legal risks arise in the broader social context but it is the definition that provides the pointer to the more immediate causes of risk and loss in any specific context. The remainder of the chapter turns to relevant case law.