The article discusses credit risk and credit ratings, focusing on two main types of credit risk: credit-default risk and credit-spread risk. Credit-default risk is when a borrower can't pay back their debt, while credit-spread risk is the extra cost for taking on credit risk. Credit derivatives help transfer credit-default risks between parties. Credit ratings are opinions on the credit risk of debt securities, helping investors make decisions. Methods like name recognition and formal credit ratings are used to assess credit risk. The chapter also touches on the rating transition matrix and corporate recovery rates.