Why does where a corporate holds its cash matter for counterparty risk, and what is bail-in risk on deposits?

Corporate cash sits as an unsecured deposit (or claim) on a bank, so the treasurer is a creditor of that bank — concentrating large balances in one institution is a real credit exposure, not 'risk-free'. Bail-in risk is the post-2008 reality that, under bank resolution regimes (EU BRRD, similar elsewhere), if a bank fails, authorities can write down or convert uninsured liabilities — including large corporate deposits above the protection limit — to recapitalize it, so depositors can lose money rather than being bailed out. Treasurers manage this by diversifying cash across multiple high-quality counterparties within concentration limits, using money-market funds or government securities for surplus, monitoring counterparty credit (ratings, CDS), and preferring instruments/structures with better standing where material. The discipline is to treat deposits as credit exposure, set per-bank limits, and not assume any single bank balance is automatically safe.