Default Risk: Difference between revisions
From Open Risk Manual
Wiki admin (talk | contribs) No edit summary |
(No difference)
|
Latest revision as of 14:56, 9 August 2019
Definition
Default Risk is the potential occurrence of a Default Event, namely an obligor or counterparty not fulfilling their side of a financial contract. Depending on the nature of the contract and the circumstances of the defaulting party, a default event may or may not lead to financial loss to the other parties involved.
In contrast, the risk of financial loss given a default event is termed Recovery Risk