Settlement Risk

Settlement Risk

Settlement Risk Jonathan Poland

Settlement risk is the risk that a trading counterparty will not deliver a security or asset as agreed upon in a trade. This risk is most commonly associated with the trading of securities on financial markets. To address this risk, many countries have laws and institutions in place that provide guarantees on settlement, including time limits for completing transactions.

Historically, the foreign exchange market has been a significant source of settlement risk. For example, the collapse of Herstatt Bank in Germany in 1974 resulted in the bank failing to settle several major transactions with foreign counterparties, leading to improvements in international settlement practices, such as the adoption of real-time gross settlement systems that execute transactions in real-time and are considered final.

Reverse Distribution Jonathan Poland

Reverse Distribution

Reserve distribution is the process of distributing a reserve, which is a reserve amount of money or other resources that…

Data Breach Jonathan Poland

Data Breach

A data breach is a security incident in which sensitive, protected, or confidential data is accessed, disclosed, or stolen. Data…

Administrative Burden Jonathan Poland

Administrative Burden

Administrative burden refers to the workload and effort required to comply with laws and regulations that do not directly contribute…

Decision Framing Jonathan Poland

Decision Framing

Decision framing refers to the way in which a choice or dilemma is presented or structured. This includes the language…

What is Air Gap? Jonathan Poland

What is Air Gap?

An air gap is a computer network that is physically isolated from other networks, including the internet. This isolation is…

Cost of Capital Jonathan Poland

Cost of Capital

The cost of capital is the required rate of return that a company must earn on its investments in order…

Team Manager Jonathan Poland

Team Manager

A team manager is responsible for directing and controlling an organizational unit. This leadership role involves authority and accountability for…

Durable Competitive Advantage Jonathan Poland

Durable Competitive Advantage

The most important aspect of durability is market fit. Unique super simple products or services that does change much if…

Serviceable Market Jonathan Poland

Serviceable Market

Serviceable market is the part of the total addressable market that can actually be reached.

Learn More

Risk Awareness Jonathan Poland

Risk Awareness

Risk awareness refers to the extent to which people or organizations are aware of risks and the strategies in place…

How does a boat float? Jonathan Poland

How does a boat float?

A boat floats due to the principle of buoyancy, which is based on Archimedes’ principle. Archimedes’ principle states that an…

Positive Risk Jonathan Poland

Positive Risk

Positive risk refers to the potential for achieving an outcome that is too good. While risk is often associated with…

What is Leadership? Jonathan Poland

What is Leadership?

In the modern business world, where rapid changes, technological advancements, and global challenges are the norm, effective leadership is more…

Dismissing Employees Jonathan Poland

Dismissing Employees

Letting go (aka firing) employees is a difficult and sensitive task, and it’s important to handle it with care and…

Channel Structure Jonathan Poland

Channel Structure

Market penetration is the percentage of a target market that purchased a company’s product or service over a period of time.

Innovation Metrics Jonathan Poland

Innovation Metrics

Innovation metrics are tools used to assess the innovation efforts of a company. It can be challenging to accurately measure…

Operational Risk Jonathan Poland

Operational Risk

Operations risk is the risk of financial loss or other negative consequences that may arise from the operation of a…

Direct Marketing Jonathan Poland

Direct Marketing

Direct marketing is a type of marketing that involves communicating directly with potential customers in order to generate a response…