credit-risk

Vocabulary Word

Definition

'Credit-risk' refers to the risk that a borrower won't pay back a loan or fulfil an obligation. Like lending money to a friend who might not pay you back.

Examples in Different Contexts

In banking, 'credit-risk' refers to the possibility that a borrower will not repay a loan. A bank manager might say, 'Assessing credit-risk is a critical part of our loan approval process, ensuring we lend responsibly to minimize losses.'

Practice Scenarios

Tech

Scenario:

We're updating the system to better predict potential loan defaults using artificial intelligence. That should refine our decision-making processes.

Response:

Indeed, identifying credit-risk through AI should significantly improve our risk assessment capabilities.

Accounting

Scenario:

We need to tighten our credit control strategies. Too many customers are defaulting, and it’s creating a significant impact on our bottom line.

Response:

Absolutely, I suggest we carry out a thorough credit-risk assessment of all accounts exceeding 60 days overdue.