Litigation Risk Management

Definition ∞ Litigation risk management involves the systematic identification, assessment, and mitigation of potential legal disputes that could result in financial or reputational harm to an organization. This process includes implementing preventative measures, establishing internal controls, and developing response plans for anticipated legal challenges. Effective management aims to minimize exposure to lawsuits and reduce the associated costs. It is a vital component of corporate governance.
Context ∞ For entities operating in the digital asset space, litigation risk management is exceptionally important due to the uncertain regulatory environment and the rapid pace of technological change. Firms must account for potential lawsuits related to security token offerings, smart contract vulnerabilities, or consumer protection issues. Proactive measures, such as clear disclosures and robust internal compliance, are crucial for navigating this complex legal terrain.