Regulatory fines moved into legal risk definition
According to a source close to the Basel Committee on Banking Supervision, the concept of legal risk will be explicitly broadened in the final version of the Basel II document, due out at the end of June – to include fines, penalties and punitive damages that are a result of regulatory actions.
Indeed, some operational risk managers view legal risk as purely the result of legal problems, with a specific focus on counterparty risk. For example, law firm Clifford Chance defined legal risk in a seminar earlier this year as "the risk that one is unable to enforce rights against, or
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