What are the Key Components of Credit Risk Management?
Several components are essential for effective credit risk management:
- Risk Identification: Identifying potential credit risks through financial analysis and market research. - Risk Assessment: Evaluating the likelihood and impact of identified risks. - Risk Mitigation: Implementing strategies such as credit limits, collateral, and credit insurance to mitigate risks. - Monitoring and Reporting: Continuously monitoring the creditworthiness of borrowers and reporting any changes in their risk profile.