While CDS can be useful for managing credit risk, they also come with significant risks. One of the primary risks is counterparty risk, which is the risk that the seller of the CDS may not be able to fulfill their payment obligations if a credit event occurs. Additionally, CDS can contribute to systemic risk in the financial system, as seen during the 2008 financial crisis. The complexity and lack of transparency in the CDS market can create vulnerabilities that affect the broader economy.