If there are a few borrowers in the pool that are significant in size relative to the entire pool balance, this diversification benefit can be lost, resulting in a higher level of credit risk referred to as ________.

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Concentration risk refers to the heightened level of credit risk that arises when a few borrowers in a loan pool have a significant balance relative to the entire pool. This can be problematic because if any of these borrowers default, the impact on the overall pool can be substantial. Focus risk, concentric risk, and intensity risk are not commonly used industry terms to describe credit risk.

If There Are a Few Borrowers in the Pool That