debtor risk

Debtor risk refers to the chance that a person or organization who owes money (the debtor) might fail to pay back what they owe on time or at all. This risk can impact lenders or businesses because it affects their expected income and financial stability. Factors influencing debtor risk include the debtor's financial health, credit history, and current economic conditions. Managing this risk often involves credit checks, setting appropriate credit limits, or requiring collateral to reduce potential losses if the debtor defaults.