Credit Risk Management

Credit Risk Management is the process used by banks and financial institutions to assess and manage the risk that borrowers may fail to repay their loans. It involves analyzing the creditworthiness of individuals or companies, setting lending criteria, and monitoring existing loans for changes in risk. By identifying potential defaults early, institutions can take steps to minimize losses, such as adjusting interest rates, requiring collateral, or developing repayment plans. Ultimately, effective credit risk management helps maintain financial stability and ensures that lending practices are sound and responsible.