Effective Credit Risk Mitigation Strategies

Jordan is a senior portfolio manager at a large investment firm that is considering increasing its allocations to high-yield corporate bonds. Given the current economic climate, Jordan is particularly concerned about the potential credit risk that could arise from these investments. High-yield bonds, while offering greater returns, come with a heightened risk of default due to the lower credit quality of issuers. Jordan is preparing a presentation for the firm's investment committee to highlight the key aspects of managing credit risk related to high-yield bonds.

To effectively assess and manage credit risk, it is crucial to consider various approaches and strategies. Which of the following measures is most effective in mitigating credit risk within a bond portfolio?