A risk that arises when payments are not exchanged simultaneously. A simple case would be a party making a payment to its counterparty but not being recompensed until sometime later; there is a risk is that the counterparty may default before making the counter payment. Settlement risk is most pronounced in the foreign exchange markets, where payments in different currencies take place during normal business hours in their respective countries and can therefore be made up to 18 hours apart and where the volume of payments makes it impossible to monitor receipts except on a delayed basis.