We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can view our cookie policy and edit your settings here, or by following the link at the bottom of any page on our site.
The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.
Counterparty risk (also called ‘default risk’) is the risk to each party of a contract that the other party will not live up to its contractual obligations.
Counterparty risk definition
Counterparty risk (also called ‘default risk’) is the risk to each party of a contract that the other party will not live up to its contractual obligations.
An example would be a mortgage taken up with a bank. The bank will be exposed to the risk of payment default, where the borrower has the risk of not receiving the agreed loan amount.