Interest rate risk may be borne by one or both counterparties to a transaction. In some transactions, the seller of the service assumes the interest rate risk but charges the customer a fee based on some estimate of the degree of risk assumed. Banks are subject to severe interest rate risk since the slightest movement in critical rates can produce significant gains or losses. Banks often use derivative hedges to limit the volatility of interest rates, thus mitigating the risk (by removing or diminishing the second definition above).