credit risk

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Related to credit risk: Market risk, Liquidity risk, Operational risk

Credit risk

The risk that an issuer of debt securities or a borrower may default on its obligations, or that the payment may not be made on a negotiable instrument. Related: Default risk.

Default Risk

The risk that a debtor will be unable to pay back its loans. Default risk goes up if a debtor has large number of liabilities and poor cash flow. Generally speaking, companies and persons with high default risk stand a greater chance of a loan being denied and pay a higher interest rate on the loans they do receive. See also: Bankruptcy.

credit risk

The risk that a borrower will be unable to make payment of interest or principal in a timely manner.
References in periodicals archive ?
Through Fannie Maes market-leading credit risk management capabilities, the company acts as an intermediary between lenders and investors by setting standards, providing credit risk management oversight, and maintaining stability through business cycles.
The Ambit credit risk management solution is to be used for credit assessment and credit portfolio monitoring for risk-based decisions, pricing and improved capital and credit risk management.
In today's changing financial landscape an organisation's ability to effectively monitor and manage its credit risk can mean the difference between success and survival, said senior conference producer at Fleming Gulf Zenab S Husain.
Husain, Senior Conference Producer at Fleming Gulf quotes C[pounds sterling]In light of the challenges posed by rapidly evolving credit markets and unprecedented growth of the Middle East financial sector, effective credit risk management has indeed become one of the most important aspects of a successful financial institution's operation.
Credit risk and receivables management functions have to be coordinated, with the front-end credit evaluation properly limiting risk of bad-debt write-offs, while the back end collections have to be automated to accelerate customer payments.
The main focus is modeling credit risk: measuring portfolio credit risk and pricing different securities exposed to credit risk.
The Basel Committee comment letter also discussed the own credit risk issue.
After operational risk, the biggest challenge facing the industry is credit risk because large-scale borrower defaults may even force a bank into bankruptcy.
A solvent banking system, ready and able to take credit risk, would also remove a major source of deflationary pressure.
Compliance with approved policies, such as whether the entity adhered to established market and credit risk limits, the reporting of any instances in which such limits were exceeded and whether appropriate remedial action was taken.
Deep MI CRT builds on the success of our Agency Credit Insurance Structure (ACIS) program and is the first credit risk transfer offering in the market with a flow-basis structure on loans purchased from our diverse lender base," said Kevin Palmer, senior vice president of credit risk transfer at Freddie Mac.