top of page

Credit risk arises from the potential that a customer or counterparty will fail to perform on an obligation. For most firms, loans are the largest and most obvious source of credit risk. However, there are other sources of credit risk both on and off the balance sheet. Off-balance sheet items include letters of credit unfunded loan commitments, and lines of credit. Other products, activities, and services that expose a firm to credit risk are credit derivatives, foreign exchange, and cash management services.

bottom of page