Definition
Counterparty risk is the risk that the other party in a financial transaction will default. Founders reach for it when a vague conversation needs a shared, specific meaning. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
A mentor asks, “What is your Counterparty risk?” The useful answer is concrete: risk that the other party in a financial transaction will default. A slide title is not an answer.
Common mistake
Using Counterparty risk as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Cost-benefit analysis
Systematic approach to evaluating the costs and benefits of a decision.
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Cost-volume-profit (CVP) analysis
Financial analysis examining how costs, volume, and profits are related.
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Coupon
Interest payment on a bond, typically paid semiannually to bondholders.
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Credit
Ability to borrow money or obtain goods and services with deferred payment.
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