What is 'credit equivalent amount' in SAP FS-BA-PM-CR - Credit Risk?

credit equivalent amount - Overview

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: The total of the replacement cost plus the add-on amount, which gives the exposure at default EAD for derivatives.

credit equivalent amount - Details

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  Key Concepts: 
  The credit equivalent amount is a term used in the SAP FS-BA-PM-CR Credit Risk Management component. It is a measure of the risk associated with a particular credit transaction. It is calculated by multiplying the amount of the credit transaction by a risk factor, which is determined by the credit rating of the counterparty. 
  
  How to use it: 
  The credit equivalent amount is used to assess the risk associated with a particular credit transaction. It is calculated by multiplying the amount of the credit transaction by a risk factor, which is determined by the credit rating of the counterparty. The higher the risk factor, the higher the credit equivalent amount. 
  
  Tips & Tricks: 
  When calculating the credit equivalent amount, it is important to consider both the amount of the credit transaction and the risk factor associated with it. The higher the risk factor, the higher the credit equivalent amount. 
  
  Related Information: 
  The credit equivalent amount is an important concept in SAP FS-BA-PM-CR Credit Risk Management. It is used to assess and manage risk associated with a particular credit transaction. For more information on this topic, please refer to SAP's documentation on Credit Risk Management.