Aggregate Risk

In general, the term "aggregate risk" refers to the total amount of exposure you have to a certain negative outcome.

If you worked for Toys R Us (RIP), you had a major risk of losing your income if the company went out of business (like it did in March of 2018). Meanwhile, if your spouse works for Amazon, then your family income is protected somewhat. You lost your job when Toys R Us went under, but your spouse still has work. Your family income is half of what it used to be, but 50% is better than 0%.

However, if you both worked for Toys R Us (let's say you met on a company picnic), then your family's aggregate risk from a Toys R Us liquidation is even higher. Going out of business means the loss of 100% of the family's income. (We won't even talk about the fact that both of you had all your retirement tied up in company stock.)

So that's a general definition of aggregate risk.

Taking it a step further, there is a specific case when the term is used frequently. The phrase comes up in currency exchange. In this context, it refers to the total amount of exposure a firm has to foreign currency counterparty risk from a particular account.

In foreign currency trading, there is a counterparty to any transaction. Someone on the other side of the trade. Imbedded in the transaction is the belief that the counterparty will keep up their end of the bargain. However, a risk exists that the counterparty won't fulfill its obligation. The total level of this risk coming from all the positions held by a client equates to the aggregate risk in the scenario.