What is realized LGD in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: realized LGD

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: The realized LGD is a key figure that is uses for reporting purposes. It is a value that is derived from other values, and is compared ex-post with the estimated LGD.

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• Key Concepts: 
  Realized LGD (Loss Given Default) is a measure of the expected loss given a default event in the Credit Risk Management component of SAP FS-BA-PM-CR. It is calculated by dividing the total expected losses by the total exposure at default. 
  
  How to use it: 
  Realized LGD can be used to assess the creditworthiness of a customer or counterparty. It is used to determine the amount of capital that should be set aside to cover potential losses in the event of a default. 
  
  Tips & Tricks: 
  It is important to note that Realized LGD is not an exact measure of expected losses, but rather an estimate based on historical data and current market conditions. As such, it should be used as a guide rather than an absolute measure. 
  
  Related Information: 
  Realized LGD is closely related to other measures of credit risk such as Probability of Default (PD) and Exposure at Default (EAD). These measures can be used together to assess the overall creditworthiness of a customer or counterparty.