Index

Up: Payment Risk Events
See also: Compliance Gaps

What is a Liability Horizon?

Definition

A liability horizon is the period after a transaction during which reversal or dispute remains possible.

Why it matters

It determines:

  • reserve requirements
  • payout delays
  • accounting treatment
  • capital exposure

Examples

  • Card disputes: 120–540 days
  • ACH returns: up to 60 days
  • BNPL defaults: months
  • Fraud claims: variable

Breakdown modes

  • underfunded reserves
  • premature payouts
  • unexpected clawbacks

Where observability fits

  • maps exposure windows
  • aligns funds to risk
  • forecasts release timing

FAQ

Does settlement end liability?

No. Settlement only moves funds, not responsibility.

Are horizons fixed?

No. They vary by network and product.

Next Step

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