Article 5 — Definitions specific to capital requirements for credit risk
For the purposes of Part Three, Title II, the following definitions shall apply:
- exposure means an asset or off-balance sheet item;
- loss means economic loss, including material discount effects, and material direct and indirect costs associated with collecting on the instrument;
- expected loss or EL means the ratio of the amount expected to be lost on an exposure from a potential default of a counterparty or dilution over a one-year period to the amount outstanding at default.