Legal costs and legal decisions are examples of risks in which general class of risk?

• A. Social
• B. Technological
• C. Juridical
• D. Political

Answer: (C)

Focusing on legal rules and how they are applied is what this question tests. Legal costs and legal decisions stem from the juridical environment—the statutes, contracts, and court interpretations that govern rights and duties. This category, juridical risk, captures potential losses from lawsuits, disputes, penalties, or shifts in how laws are enforced. It’s different from social risk (which comes from societal behavior and norms), technological risk (which arises from technology failures or cyber threats), and political risk (which involves government actions like policy changes or instability). So, legal costs and court decisions are best understood as juridical risk because they originate directly from the legal system and its enforcement.