Credit Risk for Financial Firms
Credit risk is a form of financial risk. For most financial firms, loans - including mortgages, credit cards, personal loans and corporate loans - are the primary source of credit risk.
Some credit risk takes the form of counterparty credit risk. This is the risk that arises from the possibility that the counterparty defaulting on amounts owed
In our Credit Risk for Financial Firms course, you'll learn about default risk, credit risk, its key components and how to manage it.
- 40 Minutes
- All staff
- Based on best-practice risk management frameworks and suitable for global audiences.
Learning objectives
- Understand what credit risk is, including its sub-types
- Quantify and calculate credit risk
- Recognise who manages credit risk within a company
- Learn how to manage credit risk by identifying, assessing, treating, monitoring and reporting it
- Recognise the importance of continual improvement for credit risk management
What can you expect your employees to learn?
Welcome
- Learning objectives
- How to complete this course
What is credit risk?
- Types of credit risk
- You decide: True or false?
- What is default risk?
- Calculate the default risk
- The relationship between interest rates & credit risk
- Credit derivatives
- You decide: True or false?
Who manages credit risk in a company?
- You decide: Who manages credit risk?
What kinds of rules do financial services regulators write about credit risk?
- In the news: Credit risk
The Management of Risk (MoR) framework
Identifying credit risk
- Scenario: The business loan
Assessing Credit Risk
Short-term solvency ratios
- Scenario: Background checks using short-term solvency ratios
Capitalisation ratios
- Scenario: Background checks using capitalisation ratios
Coverage ratios
- Scenario: Background checks using coverage ratios
Assessing the ability to service debt
- Scenario: Assessing the ability to service debt
Determining credit risk appetite
- You decide: Engaging with credit risk appetite
Treating credit risk
- Credit risk controls
- You decide: Credit risk controls
Credit risk monitoring
- Scenario: Credit risk monitoring
Credit risk reporting
- Deeper dive: Credit risk reports
- You decide: Credit risk reporting
Continual improvement of credit risk
- Scenario 1: Rising inflation
- Scenario 2: The bankruptcy
Your responsibility
Summary
Affirmation
Assessment
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Your questions, answered
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