What risks are associated with granting credit?
The risk of lending on character is called "moral risk," the
risk of lending on capacity is called "business risk," and the risk
of lending on capital is called "property risk." An ideal borrower
will combine a minimum of each of these three risks
Related Q&A：
What is capital risk？Well, let me tell you. Capital risk is basically the potential for losing the money or assets you've invested. You know, when you put your hard-earned cash into something like a business, a stock, or any kind of investment, there's always a chance that things might not go as planned. It could be due to market fluctuations, bad management, unforeseen circumstances, or a bunch of other factors. And if that happens, you might end up losing a significant portion or even all of your initial investment. So, it's super important to be aware of capital risk and do your research before making any big financial decisions.
