One of the fastest growing and most intractable areas of operational loss exposure is that presented by contingent client-related liability. This relates to indirect responsibility for a client's business operations and products. Since major liability losses may bankrupt a client, plaintiffs will seek anyone connected with the client possessing sufficient funds to secure a financial settlement. Unfortunately, this is often a bank with whom the client had or has a relationship. These types of contingent liabilities may arise from a number of situations including.

• 1. Environmental Liability: Banks may incur substantial environmental liability when they become responsible for environmental damage or hazardous waste cleanup (i.e. an oil spill from a tanker for which the bank was a lender). This type of liability exposure is expanding globally at a tremendous rate as countries continue to enact ever more punitive environmental laws and regulations.

• 2. Product Liability: Product liability may occur when a client in which the bank has an equity position or financing interest is sued alleging negligence (i.e., class action suits against a pharmaceutical manufacturer).

• 3. Death and Bodily Injury : This liability may arise from an event involving a bank owned asset that is leased to or operated by others (i.e. commercial aircraft) or from an event involving a repossessed asset (i.e., fire at bank owned or controlled hotel).

Therefore, as global environmental and product liability laws and regulations becomes more stringent and tort liability becomes more widespread, all Saudi banks will become increasingly more exposed to this type of operational risk both inside and outside the Kingdom.