What will happen to the Financial Institution if the function" Investigation and Credit Analysis" is disregarded?Explain briefly and cite an example to support your answer.
Credit analysis evaluates the riskiness of debt instruments issued by companies or entities to measure the entity's ability to meet its obligations.
The credit analysis seeks to identify the appropriate level of default risk associated with investing in that particular entity.
The outcome of the credit analysis will determine what risk rating to assign the debt issuer or borrower.
Not only is the credit analysis used to predict the probability of a borrower defaulting on its debt, but it's also used to assess how severe the losses will be in the event of default.
