Internal ratings-based approach (credit risk) (source code)

= Internal ratings-based approach (credit risk)
{wiki=Internal_ratings-based_approach_(credit_risk)}

The Internal Ratings-Based (IRB) approach is a method used by banks and financial institutions to calculate the capital requirements for credit risk under regulatory frameworks, such as the Basel Accords. This approach allows banks to use their own internal estimates of credit risk parameters to determine the capital necessary to protect against potential losses from their lending activities.