Default Risk
From Open Risk Manual
Revision as of 14:56, 9 August 2019 by Wiki admin (talk | contribs)
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