I’m going to be talking about credit risk remember this is mainly just my opinion so don’t take anything stated as fact rather quotes your textbook in the exams this is you’re very much an alternative view but that further dude let’s get into it let’s start talking about credit risk and once again we’re starting with a definition issue some people refer to counterparty risk as a form of credit risk other people only refer to default risk as create risk so we do have this split in definitions counterparty risk is whenever you rely on another party and they fail to meet your obligations

Whether it’s a supplier who fails to bring the goods or someone who says they’re going to do something but they don’t that is known as counterparty risk I had a little encounter with counterparty risk myself I signed up for this Google thing where you have to review 200 places and then they give you a terabyte of hard drive space I did that only for them to then say sorry we’re not going to give you that free terabyte we’re only going to give you a hundred gigabytes that’s an example of a counterparty risk where you’re relying on someone and they let you down Google however very clever you know they have their little terms and conditions so I cannot sue them or be too disgruntled you know that super long list of documents

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