More FIs fail as a result of credit risk exposures than either interest rate or foreign exchange (FX) risk exposure.

Question

Quizplus · Accepted Answer

Credit risk is typically the biggest risk factor for financial institutions, and failure to properly manage credit risk can lead to significant losses and ultimately, failure of the institution. Interest rate and foreign exchange risk can also play a role in FI failures, but credit risk is generally considered the most critical factor.

More FIs Fail as a Result of Credit Risk Exposures