Risk Tolerance
/ˈrɪsk ˈtɒlərəns/
Definitions
- (n.) The degree to which a party is willing to accept potential legal or financial loss before taking precautionary or mitigating actions.
The contract was drafted with a high risk tolerance, allowing for some uncertainty in liability outcomes.
Related terms
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Commentary
In legal contexts, risk tolerance often guides negotiation strategies and contract terms to balance acceptable exposure to harm or loss.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.