Loss Given Default Shift captures a change in the expected loss if the borrower defaults. In credit-risk assessment, LGD can move because collateral value changes, legal enforceability weakens, recovery time increases, guarantor strength changes, or market conditions affect asset saleability. For example, a fall in property value or expiry of insurance can increase expected loss even if probability of default has not changed. This matters because pricing, provisioning, risk grade, and portfolio capital may depend on both likelihood of default and recovery severity. The common caution is to update LGD assumptions when collateral, documentation, or recovery environment changes. A facility can become riskier even without immediate repayment default if recovery comfort deteriorates.