Adjusted Exposure (AE) is a component of credit portfolio expected loss (EL). The adjusted exposure is only the risky portion of the loan asset. It consist of: 1. All outstanding (OS) and 2. Usage given default (UGD) multiplied by commitments. Usage given default (UGD) parameterizes credit optionality: with a commitment, the bank grants a âcredit optionâ to the borrower.
