What do legal liabilities refer to in risk management?

Legal liabilities in risk management pertain to the responsibilities that arise when risk management practices fall short, leading to potential legal consequences. When an organization fails to identify, assess, or manage risks adequately, it can incur legal liabilities, which may include lawsuits, fines, and penalties. This concept emphasizes the importance of having effective risk management frameworks in place to avoid situations where an entity could be held accountable for damages or losses resulting from negligence or oversight. In contrast, the other options focus on aspects like benefits, costs, or rewards related to risk management, rather than the direct consequences of failing to manage risks properly.