What is primary exposure in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: primary exposure

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: The attributable amount assigned to the counterparty/issuer of the original transaction. See also secondary exposure.

Smart SAP Assistant

• Key Concepts: 
  Primary exposure is a term used in the IS-B-RA-CL Default Risk and Limit System of SAP. It is the maximum amount of risk that a company is willing to take on a single transaction or counterparty. It is calculated by taking into account the creditworthiness of the counterparty, the amount of collateral held, and the amount of risk associated with the transaction. 
  
  How to use it: 
  The primary exposure limit is set by the company and can be adjusted depending on the risk associated with a particular transaction. The limit should be set at a level that is appropriate for the company's risk appetite and should be monitored regularly to ensure that it is not exceeded. 
  
  Tips & Tricks: 
  It is important to remember that primary exposure limits are not static and should be adjusted as needed. Companies should also consider other factors such as market conditions, counterparty creditworthiness, and collateral when setting their primary exposure limits. 
  
  Related Information: 
  Primary exposure limits are just one part of a company's overall risk management strategy. Other important components include credit risk management, liquidity risk management, and operational risk management. Companies should ensure that all of these components are in place in order to effectively manage their risks.