What is current risk in SAP FS-CMS - Collateral Management System?

SAP Term: current risk

• Component: FS-CMS

• Component Name: Collateral Management System

• Description: The actual loss to the bank, as on the current date and without the consideration of any collaterals, in the event of a default by a borrower.

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• Key Concepts: 
  Current risk is a term used in the FS-CMS Collateral Management System (CMS) of SAP. It is a measure of the potential losses that could be incurred due to changes in market conditions or other factors. It is calculated by taking into account the current market value of the collateral, the current market value of the underlying asset, and the current market volatility. 
  
  How to use it: 
  The current risk calculation is used to determine the amount of collateral that should be held in order to protect against potential losses. The CMS system allows users to set parameters for the calculation, such as the type of collateral, the amount of collateral, and the volatility of the underlying asset. The system then calculates the current risk and provides a recommendation for how much collateral should be held. 
  
  Tips & Tricks: 
  It is important to remember that current risk is only one factor in determining how much collateral should be held. Other factors such as credit risk, liquidity risk, and counterparty risk should also be taken into account when making decisions about collateral management. 
  
  Related Information: 
  For more information on current risk and other aspects of collateral management, please refer to SAP's documentation on FS-CMS Collateral Management System.