Risk Scoring

Definition - What does Risk Scoring mean?

Risk scoring is the process of attempting to determine the likelihood that certain hazardous or perilous events will come to pass. Risk scoring is something that is often done by companies to try to figure out where they are most vulnerable to financial losses. Risk scoring matrices are often used to help solve these issues.

Justipedia explains Risk Scoring

An example of risk scoring would be a bank who gives a risk score to a number of loans that it has given out. In this circumstance, the bank could go through the loans and score them based on how likely the lender is to default, based on the lender's credit, the interest rate of the loan, and a number of other risk factors. These scores can help the bank determine which assets are strong, and which are weak.

Share this:

Connect with us

Find a Lawyer