This statement is true.
Credit risk arises from the capability that a borrower or counterparty will fail to carry out on an duty. For most banks, loans are the most important and maximum apparent supply of credit score threat. However, there are other sources of credit risk each on and stale the stability sheet.
Credit risk is described as the capability loss springing up from a bank borrower or counterparty failing to satisfy its duties in accordance with the agreed terms.
Credit risk is maximum honestly described because the capability that a financial institution borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit danger control is to maximize a bank's risk-adjusted price of return by keeping.
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