Risk assessment in banking involves analyzing the likelihood of financial loss in loans, investments, or other banking activities. Banks assess factors such as creditworthiness, market conditions, and operational risks to minimize potential losses.

A bank guarantee is a financial commitment from a bank to pay a third party a specified amount in case the bank's client fails to fulfill their obligations.

Bank guarantees are often used in contracts, particularly in construction and large projects, to assure one party that the other will fulfill their contractual obligations.

The two main types of bank guarantees are performance guarantees, which ensure the performance of a contract, and financial guarantees, which assure payment of debts or financial obligations.

A performance bank guarantee is issued to ensure that a party fulfills their contractual obligations, such as completing a project on time and according to specifications.

The beneficiary is the party that benefits from the bank guarantee, meaning they will receive compensation from the bank if the principal party defaults on their obligations.

If the party defaults, the bank is obligated to fulfill the guarantee and pay the specified amount to the beneficiary as per the terms of the guarantee.

A counter-guarantee is issued by the bank of the beneficiary to the bank that issued the original guarantee, providing additional security for the transaction.

An advance payment guarantee is commonly used in international trade to ensure that a seller will refund any advance payments made by the buyer if the seller fails to deliver goods or services.

A tender guarantee is issued to assure the entity requesting bids that the bidder will enter into a contract if awarded, thus safeguarding against default during the tender process.