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Basel Framework International regulatory standards for banks
Basel Committee on Banking Supervision
Basel Accords
Basel I
Basel II
Basel III
LCR
NSFR
FRTB
Endgame
Background
Banking / Regulation
Monetary policy / Central bank
Risk / Risk management
Pillar 1: Regulatory capital
Capital requirement
Capital ratio
Leverage ratio
Tier 1
Tier 2
Credit risk
SA-CR
IRB
F-IRB
A-IRB
EAD
SA-CCR
IMM
CCF
Market risk
Standardized
IMA
CVA vol
BA-CVA
SA-CVA
Operational risk
Basic
Standardized
AMA
Pillar 2: Supervisory review
Economic capital
Liquidity risk
Legal risk
Pillar 3: Market disclosure
Disclosure
Business and Economics Portal
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Categories of
Financial risk
Credit risk
Settlement risk
Concentration risk
Sovereign risk
Default risk
Market risk
Interest rate risk
Inflation risk
Currency risk
Equity risk
Commodity risk
Volatility risk
Systemic risk
Liquidity risk
Refinancing risk
Deposit risk
Margining risk
Investment risk
Model risk
Execution risk
Valuation risk
Business risk
Reputational risk
Operational risk
Country risk
Political risk
Legal risk
Moral hazard
Profit risk
Non-financial risk
Stranded asset
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Basel II classified legal risk as a subset of operational risk in 2003. This conception is based on a business perspective, recognizing that there are threats entailed in the business operating environment. The idea is that businesses do not operate in a vacuum and in the exploitation of opportunities and their engagement with other businesses, their activities tend to become subjects of legal liabilities and obligations.[1]
One of the primary reasons why legal risk is associated with operational risk involves fraud since it is recognized as the most significant category of operational loss events and considered to be a legal issue as well.[2] This, however, does not mean that legal risk is only confined to this conceptualization. For instance, there are specific sets of legal risks that are defined by European Union (EU) Law. In 2005, the European Central Bank declared that it will develop its own legal risk definition to help "facilitate proper risk assessment and risk management, as well as ensure a consistent approach between EU credit institutions."[3]
Further developing legitimate risk the board for any organization does not require many steps. This process won't prevent each lawsuit or administrative punishment, however, it can reduce lawful risks and enhance the organization's responses.[4]
Hazard is intrinsic in any business undertaking, and great danger management is a fundamental part of maintaining a fruitful business. An organization's management has shifting degrees of control concerning hazards. A few dangers can be straightforwardly overseen; different dangers are largely outside the ability to control organization management. Everything an organization can manage is to attempt to expect potential dangers, survey the possible effect on the organization's business, and be ready with an arrangement to respond to unfavorable occasions.[5]
^Chapman, Robert (2011). Simple Tools and Techniques for Enterprise Risk Management. Chichester, West Sussex: John Wiley & Sons. p. 435. ISBN 9781119989974.
^Moosa, Imad (2007). Operational Risk Management. New York: Palgrave Macmillan. p. 95. ISBN 9781349352951.
^Mišćenić, Emilia; Raccah, Aurélien (2016). Legal Risks in EU Law: Interdisciplinary Studies on Legal Risk Management and Better Regulation in Europe. Berlin: Springer. p. 6. ISBN 9783319285955.
Basel II classified legalrisk as a subset of operational risk in 2003. This conception is based on a business perspective, recognizing that there are...
market risk, liquidity risk, credit risk, business risk and investment risk. The four standard market risk factors are equity risk, interest rate risk, currency...
(including legalrisk), differ from the expected losses". The scope of operational risk is then broad, and can also include other classes of risks, such as...
Credit risk is the possibility of losing a lender holds due to a risk of default on a debt that may arise from a borrower failing to make required payments...
countries. In this case, the seller is exposed to a number of risks such as credit risk, and legalrisk caused by the distance, differing laws and difficulty...
Country risk refers to the risk of investing or lending in a country, arising from possible changes in the business environment that may adversely affect...
to different aspects of market risk. Nevertheless, the most commonly used types of market risk are: Equity risk, the risk that stock or stock indices (e...
risks" and additionally, "nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legalrisk"...
Information technology risk, IT risk, IT-related risk, or cyber risk is any risk relating to information technology. While information has long been appreciated...
Political risk is a type of risk faced by investors, corporations, and governments that political decisions, events, or conditions will significantly affect...
Settlement risk, also known as delivery risk or counterparty risk, is the risk that a counterparty (or intermediary agent) fails to deliver a security...
operational risk, credit risk and market risk, with more specific variants as listed aside. As for risk management more generally, financial risk management requires...
Liquidity risk is a financial risk that for a certain period of time a given financial asset, security or commodity cannot be traded quickly enough in...
positive public relations and high ethical standards to reduce business and legalrisk by taking responsibility for corporate actions. CSR strategies encourage...
Equity risk is "the financial risk involved in holding equity in a particular investment." Equity risk is a type of market risk that applies to investing...
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual...
Volatility risk is the risk of an adverse change of price, due to changes in the volatility of a factor affecting that price. It usually applies to derivative...
the market risk factors. Operational risk: risk arising from the execution of a company's business functions. Reputational risk: a type of risk related to...
Concentration risk is a banking term describing the level of risk in a bank's portfolio arising from concentration to a single counterparty, sector or...
are to reduce information technology (IT) costs and limit business and legalrisk related to the ownership and use of software, while maximizing IT responsiveness...
dealing with systemic risk, pension risk, concentration risk, strategic risk, reputational risk, liquidity risk and legalrisk, which the accord combines...
Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated...
February. Nirav Modi's legal team has made four bail applications, which have been rejected each time due to Modi deemed a flight risk. Modi, who is prisoned...
In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even...
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