Contractual Risks denotes the category of risk types facing an organization that are explicitly linked to specific contracts the organization is involved in. There is a wide variety of such contracts, leading to a number of subcategories, for example
- Existing market positions in Securities or Derivatives
- Lending Products or other Credit Risks
- Underwritten Insurance
- Internal and external Performance contracts (labour contracts)
The complementary category of Business Risk covers risk types that are less sharply defined legally (though not necessarily less real) and includes risks such franchise risk, various operational risk types, externalities the firm may be generating etc.