Exposure Management

Exposure management in credit risk management involves identifying, measuring, and controlling the potential financial losses a lender might face if a borrower fails to repay their loan. It means understanding how much money is at stake, assessing the likelihood of borrowers defaulting, and taking steps to minimize risks. This can include setting limits on how much can be lent to a single borrower, diversifying the types of loans given, and regularly reviewing borrowers' financial health. The goal is to protect the lender’s assets while enabling responsible lending practices.