What is 'priority of collateral' in SAP IS-B-RA-CL - Default Risk and Limit System?

priority of collateral - Overview

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Refers to the quality of collateral. If more than one collateral item exists for a single transaction, the priority of the collateral determines the order in which the collateral is attributed to the primary transaction.

priority of collateral - Details

• 
  Key Concepts: 
  Priority of collateral is a concept used in the IS-B-RA-CL Default Risk and Limit System of SAP. It is a way to determine the order in which collateral should be used to cover a customer’s default risk. The priority of collateral is based on the type of collateral, its value, and the customer’s creditworthiness. 
  
  How to use it: 
  In order to use the priority of collateral, you must first determine the type of collateral that is available. This can include cash, securities, or other assets. Once you have determined the type of collateral, you must then assess its value and the customer’s creditworthiness. Based on this information, you can then determine the priority of collateral for each customer. 
  
  Tips & Tricks: 
  When determining the priority of collateral, it is important to consider both the value and creditworthiness of the customer. This will help ensure that the most valuable and secure collateral is used first in order to cover any potential default risk. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System also includes other features such as limit management and risk assessment. These features can be used in conjunction with the priority of collateral to further reduce default risk.