What is 'loss unit' in SAP FS-BA-PM-CR - Credit Risk?

loss unit - Overview

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Amount that defines the width of exposure bands for the discretized calculation of the loss distribution in the Default Mode Credit Portfolio Model.

loss unit - Details

• 
  Key Concepts: 
  Loss unit is a term used in the FS-BA-PM-CR Credit Risk Management component of SAP. It is a unit of measure used to calculate the expected losses associated with a particular credit risk. Loss units are typically expressed as a percentage of the total amount of credit extended to a customer. 
  
  How to use it: 
  In order to use loss units, you must first determine the total amount of credit extended to a customer. This can be done by calculating the total amount of outstanding debt owed by the customer, as well as any additional credit that has been extended. Once this is determined, you can then calculate the expected losses associated with the customer's credit risk by multiplying the total amount of credit extended by the loss unit percentage. 
  
  Tips & Tricks: 
  When calculating loss units, it is important to consider any additional factors that may affect the expected losses associated with a particular credit risk. For example, if a customer has a history of late payments or defaults, this should be taken into account when calculating their loss unit percentage. Additionally, it is important to keep in mind that loss units are only an estimate and may not accurately reflect the actual losses associated with a particular credit risk. 
  
  Related Information: 
  For more information on loss units and how they are