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 investment, 'credit-risk' affects the return on bonds and other debt securities. An investment advisor might note, 'We evaluate the credit-risk of bonds to recommend investments that align with your risk tolerance and financial goals.'

Practice Scenarios

Business

Scenario:

We're considering extending a line of credit to this new client, but we need to assess how it might impact our financial stability.

Response:

I agree, considering their credit-risk level would indeed be crucial before extending any credit facilities.

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.