Credit Risk and its Management

The following is an excerpt from "Principles for the Management of Credit Risk", explaining what Credit Risk is.


"Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximise a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need..."

Reference:

• Principles for the Management of Credit Risk (http://www.bis.org/publ/bcbs54.htm)