Publisher's Synopsis
The primary source of revenue for most commercial banks and federal savings associations (collectively, banks) is the extension of credit, an activity that concurrently poses a risk to earnings and capital. A bank's credit risk activities, when prudently measured, monitored, and controlled, benefit shareholders, customers, and the communities served. Flawed or shortsighted credit risk management practices, however, are a leading cause of bank failure, which results in investment losses, losses to the insurance fund, business disruption, and reduced service to the community. This booklet helps bankers and examiners to identify, analyze, and establish sound risk management processes for concentrations of credit.
