How Counterparty risk is different from Credit Risk

Question

Accepted Answer

Counterparty risk is specific to the risk of default by the other party in a financial transaction, while credit risk is the risk of default by a borrower.

Counterparty risk is the risk that the other party in a financial transaction will not fulfill their obligations.
Credit risk is the risk that a borrower will not repay a loan or debt.
Counterparty risk is more specific to financial transactions between two parties, while credit risk can apply to a wider range of lending scenarios.
Examples of counterparty risk include the risk of a derivative counterparty defaulting on payments, while credit risk can be seen in a borrower failing to make mortgage payments.

Accepted Answer

Counterparty Risk
 Credit Risk

How Counterparty risk is different from Credit Risk

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