Risk exposure refers to unprotected risk, that is, the credit balance that may be exposed to risk due to the default of the debtor. It refers to the actual risk assumed and is generally connected to a specific risk.

Risk exposure refers to the credit business balance that may be exposed to risk due to the debtor's default. Customer risk weights are generally assessed by external rating agencies based on customer information and are divided into six levels: 0%, 10%, 20%, 50%, 100% and 150%.

Under the standardized approach, credit risk weighted assets = ∑ Credit risk exposure (EAD) × customer risk weight.

Extended information:

Exposure limit

The so-called "exposure limit", as the name suggests, is the amount of "risk exposure"

From the perspective of bank credit, "exposure limit" is the amount of credit funds that an enterprise can actually use for payment. The loan or acceptance limit on the bank's book is equal to the sum of the "exposure limit" and the guarantee limit. An enterprise's comprehensive credit exposure is equal to the balance of the total comprehensive credit minus the margin used for risk "offsetting".

For example: the bank gave you a credit of 700,000 yuan, and you issued a bank acceptance bill with a margin of 30% and a face value of 1 million yuan, then you used the 700,000 yuan. Bank exposure, this 700,000 yuan credit is also called exposure credit. Generally speaking, the bank's credit limit is greater than or equal to the exposure limit, and the difference depends on the margin ratio.

Reference: Baidu Encyclopedia-Risk Exposure