The Basel Committee on Banking Supervision has defined operational risk, legal risk and compliance risk. However, the definitions might not be adequate for countries with a common law legal system, such as South Africa. This paper aims to provide a practical solution to the problems faced by countries with common law legal systems that wish to comply with the Basel standards. Compliance, compliance risk and regulatory risk should all be viewed as constituent components of legal risk and, in turn, also of operational risk in a common law legal system. Legal risk is a wide concept that includes all aspects of a legal system, while compliance risk is a narrower concept that only includes the codified aspects of a legal system. Legal risk therefore includes compliance risk. However, the opposite is not true as compliance risk does not include legal risk, and the two concepts are decidedly not synonymous in a common law system.