What is covering of economic risk in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: covering of economic risk

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Amount or percentage that contains a collateral provision that covers an impending loss should the primary business partner default.

Smart SAP Assistant

• Key Concepts: 
  Covering of economic risk is a feature of the IS-B-RA-CL Default Risk and Limit System in SAP. It is a risk management tool that helps companies to identify, measure, and manage their financial risks. The system allows companies to set up limits on their exposure to certain risks, such as credit risk, market risk, and liquidity risk. It also provides tools for monitoring and controlling these risks. 
  
  How to use it: 
  The IS-B-RA-CL Default Risk and Limit System can be used to set up limits on the amount of exposure a company has to certain risks. This can be done by setting up a limit for each risk type, such as credit risk, market risk, or liquidity risk. The system also provides tools for monitoring and controlling these risks. For example, it can be used to track changes in the market or changes in the company’s financial position. 
  
  Tips & Tricks: 
  When setting up limits on exposure to certain risks, it is important to consider the company’s overall risk profile. This means taking into account the company’s current financial position, its future plans, and its ability to manage any potential losses. It is also important to consider the impact of any changes in the market or changes in the company’s financial position on the limits set. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System is part of SAP’s Risk Management Suite. This suite includes other tools for managing financial risks, such as credit risk management, market risk management, and liquidity risk management. It also includes tools for monitoring and controlling these risks, such as stress testing and scenario analysis.