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FINANCIAL MARKET COURSES

Credit Risk Management

Courses In This Course

The global financial crisis highlighted many issues, not least of which was some extraordinary mismanagement of credit risk. Post-crisis reviews pointed to a major breakdown in loan underwriting standards and indicated that far too much lending prior to the crisis was either irresponsible or not very prudent. As events proved, banks and other financial institutions can lose billions, or even go out of business, due to their failure to manage credit risk properly.

 

This course, Credit Risk Management, is part of a series of courses that are designed for financial market professionals looking to better understand and manage credit risk in a post-crisis world. Rather than focusing on how to perform credit analysis, the series adopts a “top-down” view of credit risk and its management, covering many areas that are not currently well articulated. While financial analysis has a role, well-trained bankers need to understand much more than financial statements and ratios in order to determine the ability of borrowers and counterparties to repay their obligations.

Learner Profile

This series of courses is aimed primarily at those working in a commercial/wholesale credit environment where risk assessment and credit approval is based on objective and subjective analysis and experience. However, much of the material is sufficiently generic to be relevant to retail/consumer/SME banking institutions as well.

  •    CREDIT RISK MANAGEMENT - AN

       INTRODUCTION

    Overview

    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.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk – Lessons from the Financial Crisis

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  •    CREDIT RISK MANAGEMENT - FRAMEWORK

    Overview

    Banks should have stringent structures in place to accept and manage credit risk, revolving around the creation of a robust credit risk management framework with high-level management participation. A key input into this framework is credit risk appetite, which is the level of risk that a bank is prepared to accept to achieve its objectives. This course explains why establishing and maintaining an effective credit risk management framework is a necessary condition if a bank is to achieve its objectives by only taking on and then managing those risks that are within credit risk appetite. The course also describes the various elements of a bank’s credit risk management framework, including credit policies, processes, people, authorities, and infrastructure.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk Management – An Introduction

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  •    CREDIT RISK MANAGEMENT - STAKEHOLDERS

    Overview

    Balancing the needs of shareholders, who are looking to maximize returns, with those of other stakeholders is notoriously difficult. However, ignoring stakeholder needs can have an adverse effect on company performance and, in extreme cases, lead to company failure.

     

    This course describes the various stakeholders that banks must manage, the importance of managing their often conflicting expectations, and some of the strategies and techniques for stakeholder management in the context of credit risk. There is a particular focus on regulatory stakeholders, who are among the most important stakeholders from a bank’s point of view – and an even more influential player since the financial crisis.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk Management – Framework

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  •    CREDIT RISK MANAGEMENT - STRATEGIC &

       BUSINESS UNIT MANAGEMENT

    Overview

    Banks must manage credit risk at both a strategic and business unit level. This course looks in detail at the requirements for banks to manage credit risk at the strategic level and some of the challenges they face in that regard, including internal and external constraints on business objectives, the issues involved in setting group credit risk appetite, establishing an appropriate and robust strategic credit risk management framework, and creating and sustaining a strong credit culture. The course also describes the importance of managing credit risk at the business unit level and the role of business heads, in conjunction with credit, in implementing business unit strategy in line with the bank’s business objectives and target market.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk Management – Stakeholders

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  •    CREDIT RISK MANAGEMENT - CREDIT CULTURE

    Overview

    This course describes in detail how a bank’s credit culture drives behavior. It looks at both appropriate and inappropriate staff behaviors as well as a number of common risk culture failures. Some examples of high-profile events where weak risk cultures were a root cause are discussed. Finally, the course also outlines many of the difficulties and challenges in creating and sustaining a strong credit culture.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk Management – An Introduction

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  •    CREDIT RISK MANAGEMENT - RISK/REWARD

    Overview

    Banks are in business in order to generate returns for their stakeholders. To achieve this, they must take risks and embed them in the products and services they provide. This course describes the various sources of revenue for banks, including both interest and noninterest income. It looks in detail at the factors influencing loan pricing, in addition to calculations for relationship earnings, risk-adjusted earnings, and return on capital employed (ROCE).

    Course Duration

    60 mins

    Prerequisite Knowledge

    Credit Risk Management – Credit Culture

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  •    CREDIT RISK MANAGEMENT - DATA &

       REPORTING

    Overview

    Complete, accurate, and timely credit risk reports are essential for effective credit risk management. This course describes the importance of credit data to a bank’s business, the challenges and issues associated with data capture and data ownership, and the factors to be considered when turning credit data into information. The course also explains how complete, accurate, and timely credit risk reporting – customer level, portfolio level, and statutory reports – are vital if a bank’s business and credit staff are to understand and manage credit risks.

    Course Duration

    50 mins

    Prerequisite Knowledge

    Credit Risk Management – Risk/Reward

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