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counterparty risk

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Risk Management Software
Maximize Returns & manage risk Your risk management solution.
www.Derivatives.com/risk
Counterparty Risk
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Financial Dictionary

Counterparty Risk

The risk to each party of a contract that the counterparty will not live up to its contractual obligations.

Investopedia Commentary

In most financial contracts, counterparty risk is known as "default risk".

Related Links

Junk Bonds: Everything You Need to Know
Corporate Bonds: An Introduction To Credit Risk

See also: Country Risk, Default, Default Risk, Moral Hazard, Political Risk, Risk

Also spelled: counter party risk

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
Cite This Source
Risk Management Software
Maximize Returns & manage risk Your risk management solution.
www.Derivatives.com/risk
Counterparty Risk
Expert risk management tutorials for risk professionals. Visit now!
RiskTech.FinanceTech.com/
Financial Dictionary

counterparty risk

The risk that a party to a transaction will fail to fulfill its obligations. The term is often applied specifically to swap agreements in which no clearinghouse guarantees the performance of the contract.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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