What is reference obligation in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: reference obligation

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: The reference asset underlying the credit derivative triggering the credit event and hence the liquidation of the collateral. The credit event must have already been defined by the contract partners. In addition, the reference asset governs the value of the cash settlement, or is itself the asset that is to be paid.

Smart SAP Assistant

• Key Concepts: 
  Reference obligation is a term used in the Credit Risk Management component of SAP Financial Services (FS-BA-PM-CR). It is a type of credit risk that arises when a customer fails to meet their contractual obligations. This can include failure to make payments on time, defaulting on loans, or other breaches of contract. 
  
  How to use it: 
  Reference obligation can be managed in SAP FS-BA-PM-CR by setting up credit limits and monitoring customer payment behavior. Credit limits can be set up for individual customers or for groups of customers. The system will then monitor customer payment behavior and alert users if any customers exceed their credit limit or fail to make payments on time. 
  
  Tips & Tricks: 
  It is important to regularly review customer credit limits and payment behavior in order to ensure that reference obligations are being managed effectively. This will help to minimize the risk of customers defaulting on their payments and ensure that the business is not exposed to unnecessary financial losses. 
  
  Related Information: 
  For more information about reference obligation and how it can be managed in SAP FS-BA-PM-CR, please refer to the official SAP documentation.