What is Credit risk?
The probability that a borrower or other party to a transaction (counterparty) will not meet its obligation on the agreed terms, that is, will not repay the debt or interest on time and in full. For a bank this is the most fundamental risk, because its main asset is the loans it has issued. A bank manages credit risk by assessing the borrower (credit history, scoring), taking collateral and guarantees, spreading loans across industries and clients, and creating allowances for possible losses. The Basel Committee has set out principles for the management of credit risk in a separate document.
Source: BIS, Bazel qo'mitasi: Principles for the Management of Credit Risk (2000); BIS, Bazel qo'mitasi: Principles for the Management of Credit Risk (2025)