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| + | '''Wrong Way Risk''' denotes the circumstances ([[Risk Type]]), usually in the context of a [[Derivative]] contract where there is a significant positive dependency between the [[Counterparty]]’s [[Default]] and the mark-to-market value of the contract. |
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| + | Given the default of the counterparty, the [[Replacement Cost]] is more substantial than otherwise expected. |
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| − | 1: Poor practice in many areas or with some outside accounting principles
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| + | == See Also == |
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| + | * [[Default Dependency]] |
| − | Bank has more than one deviation from accounting principles in this area Bank has more than five aspects of policies, processes or accounting relating to this area of the PP&A review that are considered below typical market standards
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| + | [[Category:Counterparty Risk]] |
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| − | 2: Poor practice in many areas or with any outside accounting principles
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| − | Bank has one deviation from accounting principles in this area Bank has more than three aspects of policies, processes or accounting relating to this area of the PP&A review that are considered below typical market standards
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| − | 3: Within accounting principles and poor practice in some areas
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| − | Bank has more than one aspect of policies, processes or accounting relating to this area of the PP&A review that are considered below typical market standards
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| − | 4: Within accounting principles and good practice in most areas
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| − | Bank has one aspect of policies, processes or accounting relating to this area of the PP&A review that are considered below typical market standards
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| − | 5: Within accounting principles and good practice in all areas
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| − | Otherwise
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Latest revision as of 15:37, 7 October 2021
Wrong Way Risk denotes the circumstances (Risk Type), usually in the context of a Derivative contract where there is a significant positive dependency between the Counterparty’s Default and the mark-to-market value of the contract.
Given the default of the counterparty, the Replacement Cost is more substantial than otherwise expected.
See Also
