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CREDIT RISK MANAGEMENT
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The potential for loss due to failure of a borrower to meet its contractual obligation to repay a
debt in accordance with the agreed terms
• Example: A homeowner stops making mortgage payments
• Commonly also referred to as default risk
• Credit events include bankruptcy, failure to pay, loan restructuring, loan moratorium,
accelerated loan payments
• For banks, credit risk typically resides in the assets in its banking book (loans and bonds held
to maturity)
• Credit risk can arise in the trading book as counterparty credit risk
Global Association of Risk Professionals - Organizational Body
NONE
CREDIT RISK MANAGEMENT
Management
English
2013
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