Delivery Risk

The risk that a counterparty in a transaction may not be able to fulfill its side of the agreement by failing to deliver the underlying asset or the cash value of the contract.

Also called settlement risk.

In the foreign exchange context, delivery risk is also known as Herstatt risk, after the small German bank that failed to cover due obligations.

While delivery risk is relatively rare, the perception of this risk can be elevated during times of global financial strain, such as during and after the collapse of Lehman Brothers in September 2008. Since it is a bigger issue in over-the-counter trading, such as with bonds and currency markets, measures to mitigate this risk include settlement via clearing houses and mark-to-market measures.


Investment dictionary. . 2012.

Look at other dictionaries:

  • DELIVERY RISK — Риск доставки риск связан с ситуацией, при которой контрагент не может выполнить свою часть сделки Словарь бизнес терминов. Академик.ру. 2001 …   Словарь бизнес-терминов

  • Delivery risk —   In all foreign currency transaction there is a delivery risk between currency settlement hours outside the country involved and the actual settlement hours in the country of the currency. The risk is equal to the full amount of the transaction… …   International financial encyclopaedia

  • Overnight Delivery Risk — The risk that occurs as a result of conducting transactions between different time zones. More specifically, this refers to how the receiving party may not necessarily know whether the other party fulfilled its obligations until the next trading… …   Investment dictionary

  • Overnight delivery risk — A risk brought about because differences in time zones between settlement centers require that payment or delivery on one side of a transaction be made without knowing until the next day whether the funds have been received in an account on the… …   Financial and business terms

  • overnight delivery risk — A risk brought about because differences in time zones between settlement centers require that payment or delivery on one side of a transaction be made without knowing until the next day whether the funds have been received in an account on the… …   Financial and business terms

  • Risk of loss — is a term used in the law of contracts to determine which party should bear the burden of risk for damage occurring to goods after the sale has been completed, but before delivery has occurred. Such considerations generally come into play after… …   Wikipedia

  • delivery — de·liv·ery n pl er·ies: an act that shows a transferor s intent to make a transfer of property (as a gift); esp: the transfer of possession or exclusive control of property to another actual delivery: a delivery (as by hand or shipment) of actual …   Law dictionary

  • risk — n 1 a: possibility of loss or injury b: liability for loss or injury if it occurs the risk of loss passes to the buyer when the goods are duly delivered to the carrier Uniform Commercial Code the risk of personal injury and property damage should …   Law dictionary

  • delivery versus payment — delivery vs. payment ( DVP) The simultaneous exchange of securities and cash. The safest method of settling either the purchase or sale of a security. In a DVP settlement, the funds are wired from the buyer s account and the security is delivered …   Financial and business terms

  • Delivery/settlement risk —   Credit risk on the delivery date, resulting in a loss of the incoming cash flow under any contract which entails the exchange of cash flows on the delivery date …   International financial encyclopaedia

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