Concentration risk

Concentration risk refers to the potential for significant losses that may occur as a result of an over-reliance on a single asset, group of assets, borrower, industry, geographic area, or any other category that comprises a substantial portion of an institution's holdings or revenue. This type of risk can manifest in various forms: 1. **Credit Concentration Risk**: This occurs when a lender or financial institution has a large exposure to a single borrower or a group of related borrowers.