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Banking

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  • June 15, 2020
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Risk Transformation

A type of transformation that is performed by banks and other depositary institutions whereby the risks associated with deposits and loans (credit risk) are minimized or mitigated. Risk transformation involves the process of diversifying venues of investment, pooling risks, screening and monitoring borrowers, and creating and maintaining adequate levels of capital and reserves to absorb unexpected losses that may impact the depositors.


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