6.2.1 Risk drivers

121. Institutions should identify and analyse potential risk drivers that are relevant to their specific circumstances and to the specific characteristics of the type of exposures covered by the rating system. Potential risk drivers analysed by institutions should include in particular the following:

(a) transaction-related risk characteristics, including type of product, type of collateral, geographical location of the collateral, unfunded credit protection, seniority, Loan-to-Value ratio (LtV), exposure size, seasoning, and recovery procedures;

(b) obligor-related risk characteristics, including, where applicable, size, capital structure, geographical region, industrial sector, and line of business;

(c) institution-related factors, including internal organisation and internal governance, relevant events such as mergers, and existence of specific entities within the group dedicated to recoveries;

(d) external factors, including interest rates, legal framework and other factors influencing the expected length of the recovery process.