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

SAP Term: issuer risk

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Danger of an unexpected loss in the value of a security due to a worsening in the credit standing of the issuer of the security. Issuer risk is relevant for both counterparty/issuer risk and country risk. Issuer risk occurs both as a primary risk securities own-trading and as a secondary risk pledging securities as collateral.

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• Key Concepts: 
  Issuer risk is a risk associated with a particular issuer of a financial instrument. It is the risk that the issuer of the instrument will not be able to meet its obligations. In the context of SAP's IS-B-RA-CL Default Risk and Limit System, issuer risk is used to determine the creditworthiness of an issuer and to set limits on the amount of exposure that can be taken on by a company. 
  
  How to use it: 
  The IS-B-RA-CL Default Risk and Limit System allows companies to set limits on their exposure to issuer risk. This system allows companies to set limits on the amount of exposure they are willing to take on for a particular issuer. The system also allows companies to monitor their exposure to issuer risk over time, so that they can adjust their limits as needed. 
  
  Tips & Tricks: 
  When setting limits on exposure to issuer risk, it is important to consider the creditworthiness of the issuer. Companies should also consider the volatility of the market and any other factors that may affect their exposure to issuer risk. Additionally, companies should regularly monitor their exposure to issuer risk and adjust their limits as needed. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System is part of SAP's Risk Management Suite, which provides companies with tools for managing their risks. The suite also includes tools for managing liquidity, market, operational, and other types of risks. Additionally, SAP provides consulting services for companies looking for help in managing their risks.