CRA statistical credit scoring models have difficulty measuring political risk events.

Question

Quizplus · Accepted Answer

CRA statistical credit scoring models primarily focus on past financial behavior and market conditions to predict credit risk. They do not take into account political risk events such as changes in government policies, regulatory frameworks, wars, or socio-political instability that can impact credit risk. As a result, these models are limited in their ability to measure political risk events.

CRA Statistical Credit Scoring Models Have Difficulty Measuring Political Risk