Credit Risk Overview: Credit Risk Appetite and Credit Risk Management
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Credit Risk Overview: Credit Risk Appetite and Credit Risk Management

Intuition Publishing
Updated Sep 25, 2020

Credit risk appetite is the level of risk that a bank is prepared to accept to achieve its objectives. When setting out business plans, bank management - from the board downwards - needs to consider the level of credit risk it is prepared to accept. Appetite must be reviewed and reset in light of changing market conditions and portfolio performance. Here we describe the concept of credit risk appetite in the context of managing credit risk.