Potential Future Exposure

Derivatives

(PFE).

The Potential Future Exposure (PFE) in a derivatives contract is an additional credit risk, over and above the current replacement cost of the contract.

The PFE represents the additional amount by which the exposure could increase, over the remaining life of the contract, with a given level of confidence.

See also

• Credit risk
• Confidence level
• Counterparty
• Fair value
• Replacement cost