Definition
Legal Risk is the possibility of adverse consequences arising from breach of Law, contractual obligations or incorrect interpretation of Legal Requirements.
Human Explanation
It is the Risk that an organisational Decision or action will produce an unfavourable legal outcome.
Why it Matters
Early identification can reduce disputes, sanctions, financial loss and operational disruption.
Conceptual Boundary
Legal Risk is not limited to litigation. It includes administrative, contractual and Compliance-related exposure.
Practical Perspective
Legal Risk should be considered when planning projects, entering Contracts and introducing new processes.