What is collateral value category in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: collateral value category

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: A distinction is made in the system between the following value categories of collateral: Percentage collateral An amount of money provided as collateral Securities provided as collateral

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• Key Concepts: 
  Collateral Value Category is a component of the IS-B-RA-CL Default Risk and Limit System. It is used to classify the value of a collateral item, such as a loan or security, in order to determine the risk associated with it. The categories are based on the type of collateral, its market value, and other factors. 
  
  How to use it: 
  The Collateral Value Category is used to determine the risk associated with a particular collateral item. This is done by assigning a category to the item based on its type, market value, and other factors. The categories range from low risk (Category 1) to high risk (Category 5). 
  
  Tips & Tricks: 
  When assigning a Collateral Value Category to an item, it is important to consider all relevant factors. This includes the type of collateral, its market value, and any other factors that may affect its risk level. Additionally, it is important to keep in mind that the categories are not absolute; they are only meant to provide an indication of the risk associated with a particular item. 
  
  Related Information: 
  The Collateral Value Category is part of the IS-B-RA-CL Default Risk and Limit System. This system is used to manage credit risk by setting limits on exposure to certain types of collateral. Additionally, it can be used to monitor and manage credit exposures across multiple entities.