In its operations, banks are exposed to many risks. Risk management in the banking industry has two main goals, which are: to avoid the insolvency of and maximize the rate of return on equity adjusted for risk. The basis of financial management consists in good and efficient management of assets and liabilities, and collecting and investing funds. Loans and other advances to customers are invested in domestic, but also in foreign currency and represent the most important component of the bank assets. Credit risk is reflected in the inability of the debtor or issuer of the financial resources for the payment of interest and/or principal under the conditions specified in the loan agreement. About 80% of bank balance sheets relates to credit risk, therefore, that the risk is the most significant of all the risks faced by all banks. Banks managed placements and structuring its own loan portfolio, in order to diversify their investments in order to minimize credit risk. Today, according to a group of clients, most loans are granted to companies in private ownership, followed by citizens and ultimately the public sector. In order to minimize credit risk introduced standards for credit risk management. In Croatia, there are laws that govern the credit risk in the banking business. Basic indicators of credit risk Croatian credit institutions have capital adequacy ratio, qualifications balance sheet liabilities, coverage and structure of the loan portfolio. Bad placements and off-balance sheet commitments are often considered as the main factors, increasing their lead to significant losses of banks. They affect macroeconomic variables or other variables such as quality of management of banks, political decision, size and market power. In the second decade of opening up the financial and banking market and enable the inflow of foreign capital and banks and has been a growth in non-performing loans and offbalance sheet commitments. According to the conducted empirical research, the Croatian banking sector, the increase in non-performing loans and off-balance sheet commitments was accompanied by a drop in GDP, rising unemployment, rising interest rates and exchange rate depreciation. To avoid a crisis, effective bank management and regulatory / supervisory institutions should be able to identify and quantify these effects. Therefore, managers of banks, together with Croatian fiscal and monetary authorities should find ways to increase foreign investment and economic activity and reduce unemployment and maintaining interest rates and exchange rate stability.