Is credit risk and default risk same?
Default risk and spread risk are the two components of credit risk, which is a type of counterparty risk.
Think of default risk as more closely associated with the general conception of counterparty risk: noncompliance with the specifications and terms of a contract..
What is default risk also known as?
Default risk (also known as credit risk) is a component of credit risk wherein a probability calculated by the lender to quantify the chance of the borrower failing to honour his obligations towards principal and/or towards interest and it is dependent on various factors such as financial health of the borrower, .
What is the difference between credit risk and counterparty default risk?
Typically, credit risk is associated with banks and other lending institutions.
Counterparty risk, on the other hand, broadly refers to the risk of a loss as a result of any party defaulting in a transaction..
What is the main difference between credit risk and operational risk?
Credit risk, on the other hand, is the risk of loss due to debtors' non-payment of a loan or other line of credit.
Operational risk, as defined by the Basel Committee, is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events..
