Being two-faced over counterparty credit risk

Counterparty credit risk is the risk that a counterparty in a financial contract will default prior to the expiry of the contract and fail to make future payments. Counterparty risk is taken by each party in an over-the-counter derivatives contract and is present in all asset classes, including interest rates, foreign exchange, equity derivatives, commodities and credit derivatives. Given the recent decline in credit quality and heterogeneous concentration of credit exposure, the high-profile