What is traditional securitization in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: traditional securitization

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: A securitization is a traditional securitization when the payment from an underlying set of credits is used to service at least two vertically arranged risk items or tranches, which have different credit risk grades.

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• Key Concepts: 
  Traditional securitization is a process used by financial institutions to manage credit risk. It involves pooling together a group of assets, such as loans, and then selling them as securities to investors. The assets are typically backed by a guarantee from the issuer, which helps to reduce the risk of default. The proceeds from the sale of the securities are then used to pay off the original loans. 
  
  How to use it: 
  SAP Credit Risk Management (FS-BA-PM-CR) provides a comprehensive solution for traditional securitization. It enables financial institutions to manage their credit risk by pooling together assets and selling them as securities. The solution also provides tools for analyzing and monitoring the performance of the securities, as well as tools for managing the associated risks. 
  
  Tips & Tricks: 
  When using SAP Credit Risk Management for traditional securitization, it is important to ensure that all of the assets in the pool are properly evaluated and that they meet all regulatory requirements. Additionally, it is important to monitor the performance of the securities over time and adjust the terms of the securitization if necessary. 
  
  Related Information: 
  SAP Credit Risk Management also provides solutions for other types of securitization, such as synthetic securitization and asset-backed commercial paper (ABCP). Additionally, SAP provides a range of other solutions for managing credit risk, such as credit scoring and portfolio management.