Credit Risks in Banking of the Countries in Transitional Phase and possible Ways of Their Reduction in Croatian Banking System

Practically, there is no human activity without being connected with some form of risk. A complexity of the activity is in a close connection with the risk level and, as a rule, the greater complexity leads to a greater risk. The importance of risk is stressed to a large extent in some sectors, such as financial institutions, especially banks. Risk is not a unique category. The most represented type of risk in credit is a credit risk. It is possible to divide factors of risk emergence and defining, their reduction and control, into following: organizational, cognitive, and technical. A time gap between decision-making and investment influences the size of a credit risk. The length of credit structure influences the risk. The cognition of debtor's debt servicing potential, methods of coverage credit risk and indicators of credit risk growth are prime movers in risk management. The optimization of risk has its positive effect on the total economic efficiency, prevents negative allocation of resources into marginal and unprofitable programs. At the same time, the credit risk size depends on total macroeconomic moves and institutional conditions. Internationalization of financial and credit courses, as a general tendency, especially influences countries in transition.