What is adjusted collateral value in SAP (FS-BA-PM-CR - Credit Risk)?

SAP Term: adjusted collateral value

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Value of collateral that takes into account any devaluation caused by the volatility of the loan that is secured, the collateral itself, or the currency.

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• Key Concepts: 
  Adjusted collateral value is a term used in the SAP Credit Risk Management component of the Financial Services Business Application. It is the value of a collateral after taking into account any depreciation or other factors that may affect its value. This value is used to determine the amount of credit that can be extended to a customer. 
  
  How to use it: 
  In order to calculate the adjusted collateral value, the user must first determine the original value of the collateral. This can be done by assessing the market value of the asset or by using an appraisal. Once this is done, any depreciation or other factors that may affect the value must be taken into account. The adjusted collateral value is then calculated by subtracting these factors from the original value. 
  
  Tips & Tricks: 
  When calculating the adjusted collateral value, it is important to take into account any potential changes in market conditions that may affect the value of the asset. Additionally, it is important to consider any additional costs associated with maintaining or securing the asset. 
  
  Related Information: 
  The adjusted collateral value is used in conjunction with other factors such as customer creditworthiness and loan terms in order to determine how much credit can be extended to a customer. Additionally, it is important to note that this value can change over time as market conditions and other factors change.