DEFINITION of Global Recovery Rate

Global Recovery Rate (GRR) can refer to businesses recovering fraud-related losses or to lending facilities that are recoverable, given a borrower's default. In the first sense, the term is used in the anti-fraud field referring to the proportion of businesses recovering more than 60% of their fraud-related losses. In the second sense, the term refers to the proportion of a borrower's lending facilities that are recoverable if that borrower defaults.

BREAKING DOWN Global Recovery Rate

According to PricewaterhouseCoopers' 2018 Global Economic Crime Survey, 49% of firms experienced some form of economic crime over the previous two years. Early detection of fraudulent activities and acquiring economic crime insurance are two of the best methods of increasing the likelihood of recovering stolen assets.

Global Recovery Rate in the second sense is used in the field of credit and banking and is usually expressed as a percentage of the exposure at default (EAD). EAD is total potential loss a bank may face if a borrower defaults. With a term loan, this exposure may be minimal because payments are fixed and limited to a given term. Other lending facilities, however, may be more open-ended and therefore present a greater risk. The GRR is also defined as the complement of the "loss given default (LGD)." That is, the GRR is equal to 1 - LGD.