Accurate estimates of credit risk are crucial for determining profitability in financial decisions. Key parameters like default probability, exposure at default, and loss in case of default are essential for credit risk modeling. Default rates can be based on market measures or historical data. Consistent risk ratings require clear rating philosophies. Exposure upon default varies with credit quality and commitment maturity. Loss determination depends on loan seniority, security, and economic conditions. Default events, exposures, and economic losses require judgment. Portfolio loss levels are calculated by considering default correlations among companies.