DEFINITION of 'Legislative Risk'

The risk that legislation by the government could significantly alter the business prospects of one or more companies, adversely affecting investment holding in that company. This may occur as a direct result of government action or by altering the demand patterns of the company''s customers,

BREAKING DOWN 'Legislative Risk'

An example of an industry with high legislative risk is healthcare. Drug manufacturers and healthcare providers both must contend with many ongoing legislative issues related to Medicare, insurance coverage and other customer payment issues.

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