Credit risk definition eba

EBA Guidelines on Loan Origination and Monitoring specify Institutions should set out, in their credit risk policies and procedures:

Credit Risk Policy is the set of formal instructions, typically documented and approved by internal governing bodies, that define in sufficient operational detail an organization's perception and attitude towards the range or credit risks it faces and desires to manage The Credit Risk policy is a key part of an organization's Risk Framework .

Credit risk focuses on the development of BTS, Guidelines and Reports regarding the calculation of capital requirements under the Standardised Approach and IRB Approach for credit risk and dilution risk in respect of all the business activities of an institution, excluding the trading book business.

In this paper the EBA sets out the agenda for future improvements of the regulations in order to enhance the comparability of the internal risk estimates and capital requirements of European institutions and also to improve the transparency of the models and their outcomes.