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A credit manager at a US-based commercial bank asks a team of risk analysts to examine the risks attributed to a large retail credit portfolio of the bank. The manager instructs the analyst to suggest measures to mitigate the "dark side" of retail credit risk affecting the portfolio. Which of the following would most likely be an effective measure?
A
Focus the extension of credit on low default portfolios such as mortgages or large corporations.
B
Concentrate on expected loss estimation since systematic risk factors such as a real estate crisis or a sharp economic downturn can be diversified away.
C
Monitor the effectiveness of credit risk assessment tools for retail customers and adjust the tools as needed.
D
Use stress tests to analyze the exposure to idiosyncratic risk factors of every single retail credit customer.