Credit risk comprises of two types. Filter the +/- signs to view the contents
Individual credit risk (Transaction risk)
refers to individual loans and essentially measures
(1) the standalone probability that the borrower will be able to repay,
(2) the ultimate loss in the case of a borrower default after use of
collateral and other mitigating factors.
Portfolio credit risk
is concerned with measuring correlations
between group borrower and the effects of diversification, the
cyclicality of collateral values and the implications of reputation and
contagion effects in micro-credit.
Lheon Risk Management in Microfinance Bank eLearning