Answer: The overarching purpose of credit risk analysis is to quantity potential credit losses.
Explanation:
The main purpose of the credit risk analysis is to quantify the amount of credit risk which is presented to the lender by the borrower. Credit risk analysis involves the assigning of measurable numbers to estimated probability of the amount borrowed by the borrower.
Credit risk analysis is a method of analysis that is performed on potential borrowers by a credit analyst to determine their capacity to meet their debt obligations. The main aim of credit analysis is to help determine the creditworthiness of borrowers and to know if they are capable of honoring their debt obligations.
If the borrower is analysed and the credit analyst is okay with the person, the person can be borrowed the amount he asks for as the outcome of the credit risk analysis is used to determine the risk rating assigned to the borrower.
Answer:
Quantify potential credit losses.
Explanation:
Credit risk analysis is defined as the process by which a creditor assesses the possibility of a borrower repaying the loan collected. It is the probability of the borrower does not pay back for any reason or fails to meet his loan obligations.
Credit risk analysis is very important for businesses because it helps them improve their business by identifying losses through bad loans.
This insight will help the firm develop strategies to minimise credit risk thereby giving them liquidity to serve customers better.
