Significant Increase in Credit Risk (SICR)
Accounting glossary · Understand, connect, apply
A significant increase in credit risk occurs when the risk of default over an instrument’s expected life has increased significantly since initial recognition.
Example
A borrower’s financial position deteriorates sharply while payments are still current. The lender reassesses default risk using the available evidence.
Remember the difference
Compare default risk with the position at initial recognition. Changes in collateral value can affect the loss amount without causing the same change in default risk.
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Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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