Characteristics of the sources of credit risk

In this case, the bank may face yet another nuisance. The court may refuse the claim because of imperfect preparation and execution of loan agreement. The same applies to other legal transactions concluded in the lending process (collateral agreement, letter of guarantee, an insurance contract). All this suggests that the risk assessment on a particular credit agreement simply need to be considered legal risk Risk Characterization Name source 1. The risk associated with the borrower (the guarantor insurer): 1.1. Objective (financial capacity) 1.2. 1.3. Subjective (reputation) 1.4. Legal Failure borrower (the guarantor insurer) to fulfill its obligations out of current receipts from the sale of assets or reputation of the borrower (the guarantor insurer) in the business world, his responsibility and willingness to fulfill its obligations Deficiencies in preparation and execution of loan agreement, letter of guarantee, the contract Insurance 2. The risk associated with the object of pledge: 2.1. Liquidity 2.2. A market 2.3. Death of 2.4. Legal Impossibility of sale of collateral impairment of the collateral over the term of the loan agreement the collateral death of shortcomings in the preparation and registration of the pledge agreement 3. Changes in systemic risk in the economic system that can make an impact on the financial condition of the borrower (for example, changing tax laws) 4. Force majeure risk of earthquakes, floods, disasters, tornadoes, strike, war What is the objective risk of the borrower, and it should be noted that the problems with repayment of loans do not arise suddenly, there are certain causes and trends that can be considered "signals "future challenges. Category: Risks in Banking