INMA S1.3.1 Legal risk

(1) Legal risk is the risk of loss resulting from:
(a) regulatory or legal action;
(b) disputes; or
(c) failure to comply with, or the inadequate management of, legal or regulatory obligations.
(2) An INMA firm’s risk management policy should include processes and procedures for identifying, assessing, managing and mitigating legal risk. The policy should include:
(a) processes for identifying events that might generate legal risk (for example, new products or processes, new documentation), the likelihood of those events occurring and their consequences; and
(b) procedures to ensure that:
(i) all contractual, legal, regulatory and other documentation is accurate and complete;
(ii) the firm complies with all its legal, regulatory, contractual and prudential requirements and obligations; and
(iii) the firm’s insurances (for example, professional indemnity insurance) are renewed in good time and remain effective.
Derived from QFCRA RM/2014-4 (as from 1st January 2015).