Types of credit risk

1. As the field of environment: political, social, legislative, economic, force majeure. The internal environment: imperfect control systems, technical 2. In terms of macroeconomic decision-making at the level of the banking institution, the responsible person 3. In terms of predictability Projected, not predictable 4. For reasons of objective and subjective 5. According to the types of development are justified, unjustified 6. Minor losses in size, large, critical 7. According to the method of overcoming individual, general 8. According to the method of minimization of risk avoidance, risk reduction, transfer (insurance), offsetting the risk acceptance (or absorption) of risk 9. By types of analysis of quantitative and qualitative As can be seen from this table, the emergence of credit risk associated with the entire lower factors. It depends on exogenous factors (ie, "outside" of the state of the economic environment, market conditions) and endogenous factors (the "internal" caused by erroneous actions of the bank). Management capabilities are limited by external factors, though timely actions the Bank may, to some extent mitigate their impact and to prevent large losses. In theory, credit risk, scientists propose to distinguish between individual credit risk and credit risk across all portfolios. The credit risk on a specific credit agreement (individual) - the probability of incurring losses on bank default by a borrower of a specific agreement. Credit risk is a credit transaction - the objective-subjective economic category associated with overcoming the uncertainty and conflict in a situation of imminent selection and displays a measure (the extent) that the borrower can not fulfill its obligations to the bank to repay the debt under the terms of the loan agreement, and at the same bank can not be promptly and fully take advantage of providing a loan to cover possible losses from it. The source of this credit risk is the individual specific counterparty bank - borrower, debtor. Topic: Risks in Banking