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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.
Consumer credit risk (also retail credit risk) is the risk of loss due to a consumer's failure or inability to repay on a consumer credit product, such as a mortgage, unsecured personal loan, credit card, overdraft etc. (the latter two options being forms of unsecured banking credit).
This includes credit card, overdraft, auto loans, personal finance and small business. Risk weight: 75%. Claims secured by residential property; Risk weight: 35%. Claims secured by commercial real estate; Risk weight: 100%. Overdue loans; more than 90 days other than residential mortgage loans. Risk weight:
Credit risk management is used by banks, credit lenders, and other financial institutions to mitigate losses primarily associated with nonpayment of loans. A credit risk occurs when there is potential that a borrower may default or miss on an obligation as stated in a contract between the financial institution and the borrower. [12]
A sovereign credit rating is the credit rating of a sovereign entity, such as a national government. The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors when looking to invest in particular jurisdictions, and also takes into account political risk.
For group of obligors sharing similar credit risk characteristics such as a RMBS or pool of loans, a PD may be derived for a group of assets that is representative of the typical (average) obligor of the group. [3] In comparison, a PD for a bond or commercial loan, are typically determined for a single entity.
This credit risk represents the charge-offs that will most likely be realized against an institution's operating income as of the financial statement end date. [1] This reserve reduces the book value of the institution's loans and leases to the amount that the institution reasonably expects to collect. [2]
Concentration risk; Constant maturity credit default swap; Consumer credit risk; Contingent convertible bond; Counterparty credit risk; Credibility theory; Credit analysis; Credit conversion factor; Credit default option; Credit default risk; Credit default swap; Credit derivative; Credit event; Credit Exposure; Credit reference; Credit spread ...