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FINANCIAL MARKET COURSES

Credit Risk – An Introduction

Despite all the innovation and complexity of recent decades, the fundamental business of banks remains the lending of money. The major risk is that of default when the money does not get repaid by customers.

 

This course outlines how credit risk is generated by the business of financial institutions, as well as the structures these institutions should have in place to manage this risk. It describes in detail the entire credit risk lifecycle, from risk assessment through to ongoing risk reporting and monitoring. The course also explains why it is important for banks to look beyond credit risk and take into account other risks such as market and operational risk when making credit decisions.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify how credit risk arises and the key factors that influence the size of credit risk exposures

    Distinguish between the different stages of the credit risk lifecycle for all customer relationships or transactions

    Recognize why credit decisions should be taken after assessing and taking into account relevant non-credit risk

  • COURSE OUTLINE

    Topic 1: Basics of Credit Risk

    What is Credit Risk?

    Credit Risk: A Simple Example

    How Does Credit Risk Arise?

    o Bank Credit

    o Trade Credit

    o Other Sources

    Credit Risk Exposure

    o Credit Risk Limits

    o Product Type

    o Currency Exposure

    o Settlement Exposure

    Measurement Basics

    Topic 2: Credit Risk Lifecycle

    Lifecycle Overview

    Assessment

    Decision

    Documentation

    Reporting

    Monitoring

    Topic 3: It’s Not Just About Credit Risk

    Risk Types & Their Interactions

    Why Seeing the Wider Picture is Important

    Market Risk

    Operational Risk

    Environmental, Social, & Ethical (ESE) & Other Risks

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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