In terms of the accounting standard for recognizing credit losses, the IAS 39 – Financial Instruments: Recognition and Measurement, a financial asset is impaired and impairment losses are incurred if and only if, there is objective evidence of impairment as a result of one  BIS central bankers’ speeches  1  or more events (i.e., loss event/s) that occurred after the initial recognition of the assets, and that loss event (or events) has an impact on the future cash flows of the financial asset that can be reliably estimated.
This approach to provisioning, also known as “incurred loss” based approach waits for certain events to happen such as default, delinquency in interest or principal payments, significant financial difficulty of the borrower, etc., before losses can be recognized.