Credit risk

Credit risk is a reduction in the value of a property due to the deteriorated creditworthiness of the borrower or credit institution. In the worst case, the risk of bankruptcy of the borrower and the complete write-off of such a claim. The most beautiful representation of credit risk is in the form of a credit spread, which represents the differences in the required returns for various risky securities. or a risk-free premium on a security with a certain credit score.