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Credit Risk Management (in many organizations, not just banks) has to do with the relative amount of exposure to the company as presented by both the credit that they provide and the credit that they are granted.
On the provisioning side, banks balance the amounts and types of credit they issue in order to meet stringent regulatory (and in some cases, legislative) requirements concerning capital, liquidity and leverage. Through weighted diversification, a bank is able to maximize the relative revenue generation of loan portfolios while minimizing the potential exposure held by the bank if borrowers do not pay them back.
On the granting side, banks borrow money through customer deposits, bank-to-bank loans, federal loans and money raised through corporate debt issuance and stock sales. Banks balance how much money they borrow (and the associated rates and durations) in order get create a positive return when that money is lent back out to their own borrowers.
Overall, the Credit Risk Management organization in a bank will define the price sheets, risk requirements and underwriting processes associated with lending money and, in many situations, work with the Corporate Finance team to mitigate risk during money raising activities.
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