Talk:Credit risk

Consumer credit risk

This page really should discuss consumer credit risk, i.e. the risk involved in lending to retail customers through products such as mortgages, unsecured personal loans, credit cards, overdrafts et al.

Counterparty risk

The term counterparty risk redirects to this page, yet is not mentioned on the page.

Counterparty risk, otherwise known as default risk, is the risk that an organization does not pay out on a credit derivative, credit default swap, credit insurance contract, or other trade or transaction when it is supposed to. Even organizations who think that they have hedged their bets by buying credit insurance of some sort still face the risk that the insurer will be unable to pay, either due to temporary liquidity issues or longer term systemic issues.

Large insurers are counterparties to many transactions, and thus this is the kind of risk that prompts financial regulators to act, e.g. the bailout of insurer AIG.

Some sources:

• http://seekingalpha.com/article/58780-counterparty-risk-and-the-subprime-fiasco
• http://www.investopedia.com/terms/c/counterpartyrisk.asp
• http://www.opriskandcompliance.com/public/showPage.html?page=810088

Edward Vielmetti (talk) 16:35, 6 October 2008 (UTC)

I added it to the article, using the first two sources, but could not see where to use the third. It could be expanded as I dimly recall counterparty risk being a normal risk accounted for during foreign exchange currency swaps (the trading bank would integrate all the risks at intervals and somehow keep the risk spread, or balanced between parties, so that it was at a minimum at the end of each day I think). -84user (talk) 18:01, 6 October 2008 (UTC)

Agree with sentiment, but in Financial Markets there is a problem of conflicted terminology. "Credit Risk" may be a risk related to movements in Credit Rating or Credit Spread, which result in valuation changes - irrespective of whether the party is a counterparty. e.g. A party is a reference entity to a CDS ( Credit Default Swap) - essentially in such a context Credit Risk is a market risk factor affecting valuation of a financial instrument. This differs significantly from Counterparty Credit Risk which is essentially "Credit Risk" as defined in this article - fundamentally any "risk of failure to meet financial obligations". The issue arises because of the nature of the differing perspectives of the financial markets. It may be worthwhile to disambiguate these concepts, perhaps a page on Market Risk(Credit Risk) may fit in somewhere, as this one is the outlier in this context. CCR may be combined in the main article, as the concepts are similar and congruent. — Preceding unsigned comment added by Edmaher (talk • contribs) 14:04, 28 August 2015 (UTC)

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Discussing concept type of credit risk

discussing the concept type of credit risk 197.252.5.85 (talk) 08:26, 7 January 2025 (UTC)