Expected credit loss
Financial Dictionary — Financial Instruments
Definition
Weighted credit loss based on probability of default under IFRS 9.
Detailed Explanation
Expected credit loss (ECL) is a probability-weighted estimate of credit losses over a period under IFRS 9, reflecting default risk and forward-looking information.
Common Uses
- Used to explain the concept in accounting and business contexts.
- Used when training staff or documenting procedures and policies.
- Used when training staff or documenting procedures and policies.
Practical Example
- Example: Teams reference **Expected credit loss** when defining terms in manuals, policies, or training materials.
Why This Term Matters
- Why it matters: Improves clarity and consistency across documentation and decision-making.