What is credit exposure calculation basis in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: credit exposure calculation basis

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Amount upon which the default risk is based, and that does not include any other assumptions, such as default rates and repayment rates. The credit exposure calculation basis is used to calculate the gross and net attributable amounts for in the calculation of counterparty risk and country risk.

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• Key Concepts: 
  Credit exposure calculation basis is a component of the SAP Credit Risk Management module. It is used to calculate the credit exposure of a customer or counterparty. The calculation is based on the customer’s credit limit, the amount of open items, and the amount of collateral held. 
  
  How to use it: 
  The credit exposure calculation basis can be used to determine the maximum amount of credit that can be extended to a customer or counterparty. This helps to ensure that the company does not overextend its credit and take on too much risk. The calculation is based on the customer’s credit limit, the amount of open items, and the amount of collateral held. 
  
  Tips & Tricks: 
  It is important to regularly review and update the credit exposure calculation basis in order to ensure that it is accurate and up-to-date. This will help to ensure that the company does not overextend its credit and take on too much risk. 
  
  Related Information: 
  The SAP Credit Risk Management module also includes other components such as Credit Limit Monitoring, Credit Risk Analysis, and Credit Risk Reporting. These components can be used in conjunction with the Credit Exposure Calculation Basis to provide a comprehensive view of a customer’s credit risk profile.