Difference between firm specific and systematic credit risk


Response to the following questions:

1. What is credit risk? Which types of FIs are more susceptible to this type of risk? Why?

2. What is the difference between firm-specific credit risk and systematic credit risk? How can an FI alleviate firm-specific credit risk?

If possible, please give examples to better understand your response.

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Risk Management: Difference between firm specific and systematic credit risk
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