Using the Moody's Analytics model, the risk on a loan can be calculated as the volatility of the loan's default rate times the loss in the event of default.

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The Moody's Analytics model uses a combination of factors to calculate risk on a loan, but one of the key components is the volatility of the loan's default rate multiplied by the loss in the event of default. This calculation helps to give a sense of the potential losses that could result from lending to a particular borrower or group of borrowers.

Using the Moody's Analytics Model, the Risk on a Loan