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

SAP Term: default risk

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Risk of an unexpected loss in the value of a receivable due to a worsening of the credit standing of a business partner or of a country relevant for country risk. Default risk therefore comprises counterparty/issuer risk and country risk.

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• Key Concepts: 
  Default risk is a type of credit risk that occurs when a customer fails to make payments on a loan or other financial obligation. The IS-B-RA-CL Default Risk and Limit System is an SAP component that helps companies manage their default risk by providing a comprehensive view of their customers’ creditworthiness. It also helps companies set limits on the amount of credit they are willing to extend to customers. 
  
  How to use it: 
  The IS-B-RA-CL Default Risk and Limit System can be used to assess the creditworthiness of customers and set limits on the amount of credit they can receive. It also provides an overview of the customer’s financial situation, including their payment history, current debt levels, and other factors that can affect their ability to pay back loans. 
  
  Tips & Tricks: 
  When using the IS-B-RA-CL Default Risk and Limit System, it is important to remember that it is only as accurate as the data that is entered into it. Therefore, it is important to ensure that all customer information is up-to-date and accurate in order for the system to provide an accurate assessment of a customer’s creditworthiness. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System is part of SAP’s Credit Management Suite, which provides a comprehensive view of a company’s credit risk management processes. The suite also includes components such as Credit Risk Analysis, Credit Risk Monitoring, and Credit Risk Reporting.