What is 'loss given default' in SAP FIN-FSCM-TRM-TM - Transaction Manager?

loss given default - Overview

• Component: FIN-FSCM-TRM-TM

• Component Name: Transaction Manager

• Description: An expected loss in percent that is due to payment defaults.

loss given default - Details

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  Key Concepts: 
  Loss Given Default (LGD) is a term used in the Transaction Manager component of SAP's Financial Supply Chain Management (FSCM) module. It is a measure of the expected loss on a loan or other financial instrument if the borrower defaults on their payments. LGD is calculated by taking the difference between the amount owed and the amount that can be recovered from the borrower's assets. 
  
  How to use it: 
  In SAP, LGD is used to assess the risk of a loan or other financial instrument. It is calculated by taking into account the amount owed, the amount that can be recovered from the borrower's assets, and any other factors that may affect the expected loss. The LGD calculation can then be used to determine whether or not to approve a loan or other financial instrument. 
  
  Tips & Tricks: 
  When calculating LGD, it is important to consider all factors that may affect the expected loss. This includes factors such as the borrower's creditworthiness, their ability to repay, and any other external factors that may affect their ability to repay. Additionally, it is important to consider any potential legal or regulatory restrictions that may limit the amount of money that can be recovered from a borrower's assets. 
  
  Related Information: 
  For more information on LGD and how it is used in SAP, please refer to SAP's