The risk, in a financial transaction, that reflects a counterparty’s failure to deliver a security or its monetary value (or broadly a financial asset or its monetary value) as per agreement when the security or asset was traded after actual delivery of a specific security or monetary amount as per the agreement. In short, it constitutes the risk that a party will default or fail to deliver as per contractual terms after monetary countervalue has been transferred to that party.

For a transfer system, it is the risk that settlement in the system will not be carried out as planned or expected, due to a certain occurrence such as a party defaulting on an obligation. This type of risk  specifically includes operational risks, credit risks and liquidity risks.