what is the difference between counterparty risk and credit risk 
credit risk and counterparty risk are related but different credit risk is a particular type of risk referring to the chance of a loss as a result of a borrower s failure to pay a loan 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 the bottom linecounterparty risk exists in many types of transactions and refers to the chance that one party will default on its contractual obligations in the transaction lenders and investors are each exposed to a degree of counterparty risk if one party is determined to have a higher level of risk that party will typically have to pay a risk premium to compensate the other party 