Credit risk意思

"Credit risk" is a term used in finance and economics to describe the potential loss that may occur if a borrower or counterparty fails to meet its financial obligations, such as by defaulting on a loan or failing to pay interest or principal on time.

In other words, credit risk is the risk that an individual, company, or country will not be able to pay back money they have borrowed. This risk can apply to a wide range of financial transactions, including loans, bonds, and derivative contracts.

Credit risk is an important consideration for lenders, investors, and other market participants, as it can have a significant impact on the safety and profitability of their investments. To manage credit risk, lenders may require borrowers to provide collateral, they may charge higher interest rates to borrowers who are considered to be a higher credit risk, or they may purchase insurance against default, such as credit default swaps.

Credit risk is also a key factor in the pricing of financial assets, as investors will typically demand a higher return on investments that are considered to be higher credit risk.