Here is a draft essay on default risk and ways of identifying it:
Introduction
Default risk refers to the possibility that a borrower will fail to make timely payments on their debt obligations. For lenders and investors, understanding and assessing default risk is crucial. Higher default risk indicates a greater likelihood that the borrower may default, resulting in losses for the lender. This essay will discuss default risk and some key ways that lenders and analysts identify and measure default risk.
Credit Ratings
One of the most common ways default risk is assessed is through credit ratings provided by rating agencies such as Moody's, S&P, and Fitch. These agencies analyze a borrower's financial strength and assign a rating that indicates their