Counterparty Risk

Counterparty risk is the risk that the other party to a contract fails to perform its obligations.

Why this matters to income investors

Failure of a trading or hedge partner can disrupt expected receipts or protection.

How to use counterparty risk in your research

Look at the specific exposure and the period measured. Ask whether the risk could reduce cash income, force a sale, or cause several holdings to weaken together; a single summary statistic cannot answer that alone.

This material is general education and information, not individualized investment, tax, or legal advice.