In the context of finance and lending, credit risk refers to the risk that an issuer of bonds or a borrower will default on any type of debt by failing to make required payments. This risk is a significant consideration in assessing potential investments and can affect investors, lenders, and institutions in various ways. Credit risk can arise in various forms such as individual loans, corporate bonds, or even sovereign debt. It is often assessed using credit ratings, which provide an indicator of the borrower's creditworthiness based on historical data and market conditions.