What Is Concentration Risk?

Concentrated risk refers to a situation in finance that in the process of asset securitization, a small number of borrowers' borrowing accounts for a considerable proportion of the entire asset pool, thereby losing the benefit of diversified risk and leading to greater risk. In the process of asset securitization, a large number of borrowers are needed in the asset pool, and the credit risk is reduced through decentralization, thereby improving the security of the securities. ^[1]