Legal Risk

The risk of loss due to legal liability.


A company makes certain aggressive claims in its product advertising.

Downside Scenario:

Consumer rights advocates initiate a class action suit against the firm. Litigation and settlement costs are suffered in settling the suit.

Upside Scenario:

The aggressive campaign pays off with significant growth in sales volumes. The marketing executive who headed the effort is rewarded with a big bonus and promotion.

Comments are closed.