The active management of credit risk has risen to the top of the agenda of most financial institutions in the last couple of years - and for good reason.
Traditionally, credit risk refers to the risk that a borrower or counterparty will fail to meet its obligations. Lending - from credit cards to corporate loans - is the largest and most obvious source of credit risk. But credit risk in some guise exists throughout bank activities, both on and off the balance sheet - from acceptances, interbank transactions, trade financing and derivatives trading to guarantees and settlement.
