what is credit risk 
credit risk is the probability of a financial loss resulting from a borrower s failure to repay a loan essentially credit risk refers to the risk that a lender may not receive the owed principal and interest which results in an interruption of cash flows and increased costs for collection lenders can mitigate credit risk by analyzing factors about a borrower s creditworthiness such as their current debt load and income although it s impossible to know exactly who will default on obligations properly assessing and managing credit risk can lessen the severity of a loss interest payments from the borrower or issuer of a debt obligation are a lender s or investor s reward for assuming credit risk 1investopedia theresa chiechiunderstanding credit risk