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FINANCIAL MARKET COURSES

Credit Risk Management - An Introduction

Here are many reasons why banks need to manage credit risk appropriately. At a broad level, it is the main risk that most banks face and the one against which they must hold the most capital. However, despite the critical importance of credit risk, there are many common failures when it comes to its management.

 

This course describes in detail the reasons why managing credit risk is so important to banks, from low margins on loan products to making the best use of scarce capital resources. The course also details the common failings of banks when it comes to managing credit risk, including not heeding the lessons learned from previous events to a tendency to look at situations from a single risk perspective.

  • OBJECTIVES

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

    Recognize the importance of sound credit risk management within banks

    Identify the common failings of banks in relation to managing credit risk

  • COURSE OUTLINE

    Topic 1: Why Managing Credit Risk is Important

    Net Interest Margin

    Margins are Thin

    Banking is Competitive

    Capital is a Scarce Resource

    Credit Risk Concentrations can Hurt

    o Concentration Risk: Example

    Expect the Unexpected

    Topic 2: Common Failures of Credit Risk Management

    Forgetting Lessons Learned

    Lack of Investment in Credit Risk Management

    Not Addressing Credit Culture

    Not Knowing When Enough is Enough

    Failing to Understand Other Risks

    o New or Revised Products

    o Refinance Risk

    o Reputational Risks

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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