"Bad risk" is a category error and there's no such thing as a bad risk. The correct attribute, in my opinion, is whether or not a risk is priced correctly.

Let's take credit and lending as an example, and use our favorite of Credit & Underwriting: 2008.

Close your eyes and imagine you're a mortgage lender and you just got a loan application for a borrower with an uber-high DTI, applying for their third mortgage on their eighth investment property.

Should you approve the loan?

That was a trick question because there's some information you need to answer the question.

At what rate?

There's no such thing as a bad risk. It's just odds and risk-adjusted returns at the end of the day.

Ex-post it's pretty clear that the answer is "reject" but if you think about opportunities today, are there certain things that you would consider doing, but you should just ask for a higher risk premium?