Credit Risk Explained | PD, LGD, EAD Made Simple

Описание: 💳 When banks collapse, it often isn’t because they stop making money — it’s because borrowers stop repaying their loans. That’s credit risk: the risk that someone won’t pay back what they owe.

In this video from The Industry Portal’s Finance Explainer Series, we break down what credit risk is, why it matters, the key metrics banks use to measure it (PD, LGD, EAD), and what happens when it isn’t managed well. From the 2008 financial crisis to everyday mortgages, credit cards, and business loans, you’ll see why this risk is at the very heart of modern banking.

✅ In this video, you’ll learn:
What credit risk really means in banking
Why defaults in the US mortgage market triggered the 2008 global financial crisis
How banks measure risk with Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD)
What Expected Loss is and how it’s calculated with real examples
Other key metrics: Non-Performing Loans (NPLs), credit spreads, and stress tests
How diversification, capital buffers, and underwriting standards reduce risk
The dangers of underestimating credit risk — and why trust is everything in banking

💡 Key takeaway: Credit risk isn’t just a technical issue for banks. It’s about trust — between borrowers, lenders, and the entire financial system. Managed well, it fuels growth. Managed badly, it can bring down economies.

👉 Whether you’re a finance professional, student, or just curious about how banking works, this video will give you a clear, practical understanding of one of the most important forces shaping the financial world.\

📚 Learn more at: www.theindustryportal.com
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