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What is the Counterparty risk?

A counterparty risk, also known as a default risk, is a risk that a counterparty will not pay what it is obligated to do on a bond, credit derivative, trade credit insurance or payment protection insurance contract, or other trade or transaction when it is supposed to, Financial institutions may hedge or take out credit insurance of some sort with a counterparty, which may find themselves unable to pay when required to do so, either due to temporary liquidity issues or longer term systemic reasons

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Question ajoutée par Nadia Ahmed Mohammed Saeed , T/L. Credi t& Risk , Canar Telecommunication Co. LTD.
Date de publication: 2013/10/30
Mohammad Zakaria
par Mohammad Zakaria , Senior Officer , AB Bank Ltd. (Previous Employer: United Commercial Bank Ltd)

It is an off balance sheet items. It is such kind kind of obligation on which exposure has been given to third party and obliged to pay whenever it is demanded. as like Bank Guarantee issued by Bank to third party on behalf of its client.

Amjad Ali
par Amjad Ali , Regional Manager , NATIONAL BANK OF PAKISTAN

Country party risk means obliger risk and the obliger means the party on which exposure has been taken. Hence, country party risk means that the obliger will not pay as per agreed terms.

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

The answer is in the question itself.

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