Financial Awareness - Risk, Stability & Emerging Finance
Which of the following is NOT a method used by banks to manage credit risk?
Which of the following is NOT a method used by banks to manage credit risk?
medium Q4 of 15
Step-by-Step Solution
Step 1: Understand credit risk management methods
Banks manage credit risk by assessing borrower creditworthiness, diversifying loans, and setting exposure limits.Step 2: Analyze options
Ignoring early warning signals increases risk and is not a management method. The other options are standard credit risk mitigation techniques.Final Answer:
Ignoring early warning signals of default → Option DQuick Check:
Ignoring early warning signals = correct ✅
Quick Trick: Early warning signals must never be ignored.
Common Mistakes:
- Assuming ignoring risks is a management strategy.
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