Credit risk

Credit risk is the risk that a borrower, whether an individual or a company, fails to repay all or part of their loan. It combines the probability of default with the loss given default. It is assessed from real repayment capacity (income, fixed costs, disposable income left, banking flows via open banking), from history and from behaviour, rather than from declared data alone. Measured properly, it allows the right amount to be granted to the right person without encouraging over indebtedness.