Types of Credit Risk
Credit risk can be classified in the following way:
- Credit default risk - The risk of loss arising from a debtor being unlikely to pay its loan obligations in full or the debtor is more than 90 days past due on any material credit obligation; default risk may impact all credit-sensitive transactions, including loans, securities and derivatives.
- Concentration risk - The risk associated with any single exposure or group of exposures with the potential to produce large enough losses to threaten a bank's core operations. It may arise in the form of single name concentration or industry concentration.
- Country risk - The risk of loss arising from a sovereign state freezing foreign currency payments (transfer/conversion risk) or when it defaults on its obligations (sovereign risk).
Read more about this topic: Credit Risk
Famous quotes containing the words types of, types, credit and/or risk:
“Our children evaluate themselves based on the opinions we have of them. When we use harsh words, biting comments, and a sarcastic tone of voice, we plant the seeds of self-doubt in their developing minds.... Children who receive a steady diet of these types of messages end up feeling powerless, inadequate, and unimportant. They start to believe that they are bad, and that they can never do enough.”
—Stephanie Martson (20th century)
“If there is nothing new on the earth, still the traveler always has a resource in the skies. They are constantly turning a new page to view. The wind sets the types on this blue ground, and the inquiring may always read a new truth there.”
—Henry David Thoreau (1817–1862)
“The most threatened group in human societies as in animal societies is the unmated male: the unmated male is more likely to wind up in prison or in an asylum or dead than his mated counterpart. He is less likely to be promoted at work and he is considered a poor credit risk.”
—Germaine Greer (b. 1939)
“Better risk loss of truth than chance of error—that is your faith-vetoer’s exact position. He is actively playing his stake as much as the believer is; he is backing the field against the religious hypothesis, just as the believer is backing the religious hypothesis against the field.”
—William James (1842–1910)