What is COLLATERAL RISK?

The RISK of loss arising from errors in the nature, quantity, pricing, or characteristics of COLLATERAL securing a transaction with CREDIT RISK. Institutions that actively accept and deliver collateral and are unable to manage the process accurately are susceptible to loss. A subcategory of PROCESS RISK.

More On This Topic



Link to This Definition
Did you find this definition of COLLATERAL RISK helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary