Litigation Risk

AAA

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.

INVESTOPEDIA EXPLAINS '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. Default Judgment

    A binding judgment issued by a court in favor of the plaintiff ...
  2. Compensatory Damages

    Money awarded to a plaintiff to compensate for damages, injury, ...
  3. External Claim

    A claim against an individual that does not arise out of any ...
  4. Class Action

    An action where an individual represents a group in a court claim. ...
  5. Punitive Damages

    Legal recompense that is levied as punishment for a wrong or ...
  6. Registered Holder

    Shareholders who hold their shares directly with a company.
Related Articles
  1. Are You Trying To Get Sued?!
    Insurance

    Are You Trying To Get Sued?!

  2. Litigation: Are Your Investments At ...
    Personal Finance

    Litigation: Are Your Investments At ...

  3. Conglomerates: Risky Proposition?
    Bonds & Fixed Income

    Conglomerates: Risky Proposition?

  4. So, You Want To Take Your Broker To ...
    Options & Futures

    So, You Want To Take Your Broker To ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center