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.

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms