Final answer:
To determine direct or indirect exposure, you must specify the Related Entity on the entity involvement record. By identifying the Related Entity, you can assess the level of exposure and determine if it is direct or indirect.
Step-by-step explanation:
To determine direct or indirect exposure, you must specify the Related Entity on the entity involvement record. The Related Entity refers to any other entity that has a connection or relationship to the entity in question. By identifying the Related Entity, you can assess the level of exposure and determine whether it is a direct or indirect involvement.
For example, if Company A is a majority shareholder of Company B, then Company B is the Related Entity. In this case, Company A has a direct exposure to Company B because it has a significant influence and control over Company B. On the other hand, if Company A has a minority ownership stake in Company B, then Company B would still be the Related Entity, but the exposure would be considered indirect as Company A has less influence and control.