Question

Explain the credit risk from the major risk

Answer 1

Credit Risk is considered the risk arising from loss that may happen due to the failure borrowers of the organization to abide the terms of any financial contract or failed in making the payments. In market, the organizations raising higher borrowing cost have significant credit risk associated with them. The loss to the organization can arise due to different reasons. Some of them have been illustrated as under:

• The party or consumer failed in making the payment due line of credit or mortgage loan
• The organization is unable in paying back the floating charge debts.