Textbook/Unit 03

Underwriting & credit risk

Merchant economics, repayment capacity, reserves, and portfolio exposure.

Unit 03 / The big picture

Underwrite the promise that remains.

A conceptual time chart shows open obligations rising after commitment and payout, then falling with delivery or repayment and run-off. Eligible available cover remains lower. The vertical difference is uncovered exposure. The curves are illustrative, not measured data. Recorded reserves are not necessarily available cover.

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Exposure can grow after cash has left the platform. Test whether repayment, fulfillment, reserves, and limits can cover the remaining obligation under stress.

  1. Start with the commitment and payout dates.

  2. Measure the obligation that remains at each point.

  3. Stress the gap between that obligation and eligible cover.

Inside this unit

5 chapters
Underwrite the open promise
3.1 / 15 min read

Underwrite the merchant business

Understand what is sold, when it is delivered, and who absorbs a failure.

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Probability × severity × exposure
3.2 / 15 min read

Credit risk and repayment capacity

Separate willingness, ability, exposure, and loss severity.

Read chapter
Money arriving is not always revenue
3.3 / 15 min read

Cash-flow analysis and financial evidence

Read financial records without confusing movement with income.

Read chapter
A reserve only covers what it can reach
3.4 / 15 min read

Reserves, limits, and payout policy

Size protection against the obligation it can actually cover.

Read chapter
A flat average can hide a weak cohort
3.5 / 14 min read

Portfolio monitoring and credit deterioration

Track cohorts, concentrations, migrations, and actions after approval.

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