Counterparty Risk

The risk that one party involved in a financial transaction or contract may fail to fulfill its obligations, resulting in an economic loss for the other party.

What You Need To Know

Counterparty risk is an essential consideration in any financial transaction involving mutual obligations. Proper assessment and management—through credit evaluations, collateralization, diversification, and regulatory compliance—are critical for mitigating potential losses and ensuring stability within financial markets. Extremely important for businesses in finance, investors and situations where their is a party lending money.