Credit Risk Appetite: Product Risk

Credit Risk Appetite: Product Risk

Intuition Publishing Pty Ltd
Updated Sep 25, 2020

Every product gives rise to a different combination of risks, although not all create credit risk. Key product risks must be identified, quantified where possible, and accepted, mitigated, or avoided. Here we discuss the importance of understanding and managing product risk. We describe the various factors that determine whether a particular product is considered high or low risk and some of the approaches banks use for setting and managing product risk appetite.