Krediidiriske

Krediidiriske, or credit risk, is the risk that a borrower or counterparty will fail to meet its contractual obligations, causing a financial loss to the lender or investor. This risk arises from the possibility that a borrower may default on debt payments, or that a party to a financial contract may fail to perform.

Credit risk can originate from individual borrowers (idiosyncratic risk), sectors, or whole economies (systemic risk) and can be affected by macroeconomic conditions, interest rates, and collateral quality. Common sources include borrower default, downgrades in credit quality, concentration risk from large exposures, and settlement risk in certain markets.

Measurement typically uses a combination of quantitative models and qualitative assessment. Banks may estimate the probability of default (PD), loss given default (LGD), and exposure at default (EAD) to compute expected or stressed losses. The Basel II/III frameworks and internal ratings-based approaches provide methodologies for calculating capital requirements, while IFRS 9 requires expected credit loss provisioning. Credit risk scoring, rating systems, and stress testing are standard tools for monitoring risk.

Management aims to reduce exposure and protect earnings. Techniques include credit underwriting standards, diversification, collateral and guarantees, pricing reflecting risk, covenants in loan agreements, and hedging with credit derivatives. Ongoing monitoring, early warning indicators, and active workout processes are used to manage deteriorating credits.

Regulatory and market developments influence credit risk practices. Changes in capital requirements, accounting standards, and macroprudential policies shape how institutions assess, price, and provision for credit risk. Understanding credit risk remains central to lending, investing, and risk management across financial markets.