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:
“The wider the range of possibilities we offer children, the more intense will be their motivations and the richer their experiences. We must widen the range of topics and goals, the types of situations we offer and their degree of structure, the kinds and combinations of resources and materials, and the possible interactions with things, peers, and adults.”
—Loris Malaguzzi (1920–1994)
“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)
“To act the part of a true friend requires more conscientious feeling than to fill with credit and complacency any other station or capacity in social life.”
—Sarah Ellis (1812–1872)
“We saw the risk we took in doing good,
But dared not spare to do the best we could
Though harm should come of it”
—Robert Frost (1874–1963)