Which factor is NOT typically considered part of credit risk?

In assessing credit risk, the primary focus is on the ability of the borrower to meet their financial obligations. This includes evaluating specific elements related directly to the borrower and the loan itself. The creditworthiness of the borrower reflects their financial health, credit history, and likelihood of default, making it fundamental to credit risk analysis. The terms and conditions of the loan, such as interest rates and repayment schedules, also play a crucial role because they determine the obligations and the likelihood that these will be met under various circumstances. The borrower's repayment history is equally significant, as it provides a track record that can strongly influence future repayment likelihood.

In contrast, the overall market environment is not typically a direct component of credit risk in most definitions. While market conditions can influence an economy and indirectly impact a borrower's ability to repay, they are considered systemic risks rather than individual credit risks. Therefore, the overall market environment is categorized differently since it pertains more to macroeconomic factors that can affect all borrowers rather than the intrinsic credit quality of the borrower or the specifics of their loan agreement.