Understanding Credit Risk

Learn the main forms of credit risk and the tools used to assess loss from default or deterioration.

In this section

Components of Credit Risk
Review the main dimensions of credit risk that affect bond pricing, portfolio quality, and default exposure.
- Default Risk
  Understand default risk as the possibility that an issuer fails to make promised interest or principal payments.
- Credit Spread Risk
  Review how changes in perceived credit quality can widen spreads and reduce bond prices.
- Downgrade Risk
  Learn how rating downgrades can affect valuation, liquidity, and portfolio eligibility.
Measuring Credit Risk
Compare the qualitative and quantitative tools used to evaluate issuer credit quality and expected loss.

Revised on Thursday, April 23, 2026