DEFINITION of 'Litigation Risk'

The possibility that legal action will be taken because of an individual's or corporation's actions, inactions, products, services or other events. Corporations generally employ some type of litigation risk analysis and management to identify key areas where the litigation risk is high, and thereby take appropriate measures to limit or eliminate those risks.

BREAKING DOWN 'Litigation Risk'

Litigation risk can be regarded as an individual's or corporation's likelihood of getting taken to court. In a litigious society, all members are at some risk of litigation. Large firms with deep pockets can be especially prone to litigation risk since the rewards for any plaintiffs can be considerable. Corporations typically have measures in place to identify and reduce risks, such as ensuring product safety and following all pertinent laws and regulations.

RELATED TERMS
  1. Adverse Domination

    A legal doctrine that allows regulators to bring litigation against ...
  2. Risk Profile

    An evaluation of an individual or organization's willingness ...
  3. Joint Liability

    An obligation, including an obligation to repay a debt between ...
  4. Safe Asset

    Assets which, in and of themselves, do not carry a high likelihood ...
  5. Country Risk

    A collection of risks associated with investing in a foreign ...
  6. First To File Rule

    A rule stating that whoever is the first to file suit is awarded ...
Related Articles
  1. Managing Wealth

    Litigation: Are Your Investments At Risk?

    Don't let company lawsuits hit you unprepared. Learn how to uncover how they might affect you.
  2. Personal Finance

    Trends In Copyright Litigation

    The Internet has resulted in an explosion in content. An increasing number of copyright trolls are monetizing such content through litigious practices.
  3. Insurance

    5 Investment Risks Created By Global Warming

    Climate-change deniers and believers alike would be wise to prepare for the worst.
  4. Managing Wealth

    Why Companies Need Risk Management

    Implementing risk management strategies can save an entire organization from failure. Is yours up to snuff?
  5. Investing

    The 5 Best Real Estate Lawyers in Manhattan

    Learn about some of the top lawyers practicing residential and commercial real estate law in Manhattan, and read more about what legal services they offer.
  6. Investing

    The Case for Merger Appraisal Rights

    In this article, we discuss appraisal rights in detail and why we believe the strategy represents a compelling investment opportunity.
  7. Financial Advisor

    Is Your Broker Ripping You Off?

    We show you how to resolve a problem without getting the lawyers involved.
  8. Financial Advisor

    The Importance of Healthcare Risk Management

    Risk management is especially important in healthcare because human lives might be on the line. Here are some strategies to map out a plan.
  9. Financial Advisor

    Do You Dare Sue Your Broker?

    A financial damages claim is not for the fainthearted, but it may be worth it in the end.
RELATED FAQS
  1. When is litigation better than mediation in a high net worth divorce case?

    Learn the variables in a divorce case that most often determine whether mediation or litigation is a better path for the ... Read Answer >>
  2. What are the risks associated with investing in the banking sector?

    Find out about the risks associated with investing in the banking sector including liquidity, risk management, consumer protection ... Read Answer >>
  3. In what context is a corporation considered to be an individual entity?

    Read about when a corporation is considered an individual entity, when it is not and why corporations are not considered ... Read Answer >>
  4. How do companies identify and manage business risk?

    Learn what risks businesses can be exposed to during any phase of the business life cycle, and how these risk can be identified ... Read Answer >>
  5. Why are mutual funds subject to market risk?

    Find out why mutual funds, like all investments, are subject to market risk, including how the different types of market ... Read Answer >>
  6. What are the different groups involved in corporate governance?

    Learn about the challenges inherent to defining and executing corporate governance, and understand why different groups work ... Read Answer >>
Hot Definitions
  1. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  2. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  3. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  4. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  5. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  6. Four Percent Rule

    A rule of thumb used to determine the amount of funds to withdraw from a retirement account each year. The four percent rule ...
Trading Center