Risk of loss from hidden legal errors and from out-of-court and court disputes; they are considered part of operational risk. – Hidden legal errors include, for example, the unintentional overlooking of a law or regulation, and in the case of contracts, in particular defects arising from wrong assumptions, badly chosen wording, or incorrect translation from or into a foreign language. Legal risks can cause or exacerbate credit risks or liquidity risks. – The legal risks of banks have increased considerably over the last ten years. The main reasons for this are – the internationalization of business and thus the question of applicable law, – the increasing complexity of new financial products, – a flood of new laws and regulations, especially in the course of strengthening investor protection, – increasing intervention in the financial sector by the supervisory authorities, and – rapid growth in electronic banking, which harbors many different and in some cases considerable individual risks for the bank, especially losses from hacker attacks of various kinds. – See supervision, supervision, full, electronic banking, financial agent, legal opinion, market abuse directive, pharming, phishing, alignment of law, choice of law, conflict of law, risk, banking, straightjacking, sign signature. – Cf. Deutsche Bundesbank Monthly Report, January 2004, p. 30 et seq.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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