The overall risk that consists of multiple types of risk relating to an entity’s failure to comply with statutory or regulatory obligations in the business environment in which it operates.

Legal risk includes 1) regulatory risk (the risk that arises from newly introduced or altered regulations that conflict with the existing mode of operations/ transactions, etc. This results in additional compliance costs), 2) compliance risk (the potential of incurring fines and penalties due to failure to comply with applicable laws and regulations) 3) contract risk, (the risk that losses may be incurred as a result of a counterparty’s failure to meet its contractual obligations. It may also result from an entity’s inability to meet its contractual obligations, subjecting it to penalties under the contract or legal disputes, etc.), 4) infringement of non-contractual rights (the risk that arises when a market player infringes on its obligations towards an entity, mainly in relation to intellectual property, patents, etc.), 5) infringement of non-contractual obligations (the risk that arises when an entity infringes on its obligations towards others, mainly in relation to intellectual property, patents, and trademarks, resulting in legal costs and penalties for infringement), 6) dispute risk (the risk that arises from running into legal disputes as a result of operations/ business activities), and reputational risk (the risk that arises from the impact of legal actions on an entity’s reputation. A damaged reputation may result in a loss of business and interest from customers and investors, etc.)