Credit Risk Mitigation
From Open Risk Manual
Definition
Credit Risk Mitigation means any technique used by a Credit Institution to reduce the credit risk associated with an exposure or exposures which the credit institution continues to hold[1]
Similar to more general Risk Mitigation, the options are broadly:
- Attempt to modify the risk profile (changing the conditions or factors that contribute to credit risk), e.g. via additional collateral
- Obtain some form of credit insurance (leaving the underlying credit risk unchanged but aiming to mitigate the impact)
References
- ↑ Directive 2006/48/EC Of the European Parliament and of the Council
