Concentration risk

The risk of potential detrimental consequences, which may arise from concentrations or reciprocal effects of similar or different risk factors or risk types. This includes for example the risk arising from loans to the same client, to a group of connected clients, to a group of clients from the same region or sector or clients with the same services and commodities, the risk arising from the use of credit risk mitigation techniques and the particular risk arising from indirect large exposures;

In the Insurance Supervision Act 2016 (VAG 2016) concentration risk is defined as “all risk exposures with a loss potential which is large enough to threaten the solvency or the financial position of insurance or reinsurance undertakings”.