This course covers Capital Lock-in Risk, which involves assessing the risk of capital being locked for extended periods in stressed exposures within the Commercial Vehicle Retail Credit workflow for accounts requiring structured assessment, boundary definition, and independent review. It evaluates key dimensions such as correlation, systemic risks in distressed assets, borrower viability, and asset valuation, with each requiring independent validation and documented rationale before any credit action is finalized.
It is distinct from portfolio diversification strategy, as it focuses on identifying and managing the risk of prolonged capital commitment in distressed assets, rather than the broader strategic objective of distributing risk across a diversified credit portfolio. Within Portfolio Concentration & Systemic Risk, the senior credit leader sets portfolio limits, governs exception criteria, and drives strategic alignment across the Commercial Vehicle Retail Credit function, shaping escalation scope and credit committee priorities.