What is Credit Risk Exposure?
Credit Risk Exposure The total potential loss a bank or financial institution faces from counterparty default on loans, credit facilities, or other exposures.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Credit Risk Exposure” Used in Practice?
Credit risk exposure must be carefully assessed to determine capital requirements and provisioning for potential loan defaults.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Credit Risk Exposure?
The total potential loss a bank or financial institution faces from counterparty default on loans, credit facilities, or other exposures.
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