The accounting threshold means a genuine risk can stay in the footnotes with no balance sheet entry until it is nearly certain. Litigation, environmental remediation and tax disputes are the usual categories.
Because recognition is binary and late, contingent liabilities are a common source of sudden one-time-charge announcements that surprise the market even though the disclosure had been sitting in the filings for years.
Example: Northwind Tools discloses a product liability claim over a battery fault, with counsel estimating exposure between $5M and $60M. It accrues the $5M low end and describes the range in the notes.
Related: one-time-charge, footnotes, off-balance-sheet, risk-factors, going-concern