THE COUNTERPARTY default risk module should reflect possible losses due to unexpecteddefault, or deterioration in the credit standing, of the counterparties and debtors of insurance and reinsurance undertakings over the forthcoming 12 months. The counterparty default risk module should cover risk-mitigating contracts, such as reinsurance arrangements, securitizations, and derivatives, and receivables from intermediaries, as well as any other credit exposures that are not covered in the spread risk submodule. For the purpose of the counterparty default risk module, reinsurance should include financial reinsurance (CEIOPS, 2009b03).