What's the meaning of Credit Risk？

Credit risk refers to the potential for loss that a lender may face if a borrower fails to repay a loan or meet their financial obligations. It is the risk that a borrower will default on a loan or other debt, resulting in a loss for the lender. Credit risk is a significant concern for banks, financial institutions, and other lenders, as it can affect their financial stability and profitability. Lenders use various methods, such as credit scoring, credit analysis, and risk management strategies, to assess and manage credit risk.