FINANCIAL MARKET COURSES
Japanese Equity Market
Receivable Finance (New)
Lending - An Introduction
The Lending Cycle
Commodities - An Introduction (Revised)
Commodities - Trading (New)
Commodities - Livestock (New)
Commodities - Softs (New)
Primer – MiFID II/MiFIR (New)
Understanding Private Wealth Management Business
Private Wealth Management Products & Services
Primer – Smart Beta (New)
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Credit Risk – Measurement & Capital Requirements
The financial crisis demonstrated that banks, as well as some nonbank financial institutions such as insurance companies, did not fully understand the size and nature of the risks that they were exposed to. While accurate measurement of credit risk is a non-trivial task, the conceptual framework itself is fairly intuitive. There are three critical parameters in determining the level of credit risk – exposure at default (EAD), probability of default (PD), and loss given default (LGD).
This course describes these parameters and how they are used to calculate the expected loss (EL) of a credit portfolio. EAD, PD, and LGD are also the main factors in determining regulatory capital requirements for credit risk under Basel III. The course outlines how capital requirements are based around the concept of unexpected loss (UL), which is a function of EL for a credit portfolio.
On completion of this course, you will be able to:
• Describe the main inputs into the credit risk measurement process
• Explain why banks require capital to cover unexpected credit losses and the minimum regulatory requirements in this regard
Topic 1: Measuring Credit Risk
o Exposure at Default (EAD)
o Loss Given Default (LGD)
o Probability of Default (PD)
• Expected Loss (EL)
• Unexpected Loss (UL)
• EL/UL & Capital
• Credit Risk Management Using EL: Attractions
• Credit Risk Management Using EL: Issues
Topic 2: Credit Risk Lifecycle
• The Need for Capital
• How Much Capital is Required?
• Capital Plans
• Capital Adequacy Ratio (CAR)
o Minimum CAR
• Qualifying Capital
• Capital Tiers & Minimum Ratios
Credit Risk – Types - View Now
ESTIMATED COMPLETED TIME
Credit Risk - Lessons from the Financial Crisis
This course describes the key mistakes made by banks and some other financial institutions, including too many concentration risks, a lack of understanding of products/risks, inadequate capital, funding and liquidity deficiencies, and issues with external credit ratings.
Intuition engages with over 30 accreditation bodies to ensure Know-How can be used for CPE credits. If your organization needs CPE from a body not listed below, contact us and we will endeavour to have them included.
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