# Counterparty Risk

*Risk & Portfolio — Finicade finance glossary*

The risk the other side of a trade won't honour their end — a live worry in bespoke, off-exchange contracts like forwards and swaps. It's why exchanges and clearing houses exist: to stand in the middle and guarantee the trade.

**Related terms:** [Forward Contract](https://finicade.com/glossary/forward-contract), [Credit Risk](https://finicade.com/glossary/credit-risk), [Swap](https://finicade.com/glossary/swap)

**Taught in:** Quant Quest — Transactions & Counterparty Risk

Source: https://finicade.com/glossary/counterparty-risk