
Credit Risk Management (CRM): What is it?
A credit risk is the risk of borrower default. It is essential to measure credit risk as banks are expected to hold reserves against expected credit losses; its cost is included in cost of funds for the borrower. In general, banks charge higher cost and higher security from less creditworthy counterparties as the credit risk of such counterparties is higher. Ultimately, the bank’s objective is also to earn money. It is vital to determine an acceptable level of risk so as to ensure adequate return to stakeholders.. credit risk management
This post was first published on the GyanOne Blog



























