Credit Risk Management by Edu Pristine

Author of lecture Credit Risk Management

Edu Pristine

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... The candidate should be able to: Describe the responsibilities of a credit risk manager, describe the Review of Strategic Credit Positions, Describe Credit Limits and Provisions ...

... senior management the value of your contributions to the company. Those contributions include the ability to avoid bad debt losses; to control account delinquencies; and to ...

... The typical credit risk manager's duties include: To establish and monitor policies and procedures that will help the company meet its sales and risk. Monitoring and evaluating active accounts to reduce or prevent bad debt losses. Keep policies and procedures current, and communicate them to your subordinates and to other affected. To listen to input from sales and sales management and then look for ways to help the sales department achieve its goals without damaging your department's ability to manage risk and control payment. Control the costs to operate the credit and collection functions. Convincing senior management when opportunities present themselves to invest in technology that can help the credit department cut costs, accelerate the decision ...

... positions. Significant risks on the credits. Providing information to all relevant parties. Surprises from the analysis report. Reviewing what is not covered in current scenarios. Changes in the current or previous provisions. Changes to specific provisions. Complete list of documentation. Rating triggers fully recognized or not. Creditprotection utilized. Possibility to exploit credit protection. Describe Credit Limits and Provisions. Credit Limits:The amount of credit that a financial institution extends to a client. Credit limit also refers to the maximum amount a credit card company will allow someone to borrow on a single card. Credit limits are usually determined based on person seeking credit, or that person's credit rating. – A borrower's credit limit may be raised after he or she having a high credit limit and multiple lines of credit may hurt cases, new potential lenders can see that the applicant may lower the chances that this person will be able to repay his or her debts in the ...

... evolution: Reviewing trends over period of time of the counterparty. Describe Stress and Scenario Analysis. Stress Analysis: It overcomes deficiencies in statistical models, try to focus on unseen co relational patterns, looks for historical stress scenario, looks for potential stress scenario and tests statistical models. Scenario Analysis: Scenarios capture opinions, experience and self. If properly used, scenario analysis can also help in assessment of low frequency, high severity losses for which internal data might be zero/negligible. Describe Stress ...

... Provisions are useless unless monitored. Example: A loan might require a borrower to maintain an AA bond rating, with the loan becoming immediately payable in the case of a downgrade. Describe Provisioning and Documentation. Example: A loan might require a borrower to maintain an AA ...

... regulators and rating agencies. Ownership of credit process: Setting limits, establishing capital requirements, credit stress and... Questions and Answers: 1. Which of the task is not performed by the credit officer? a) Strategic credit positions. b) Stress analysis. c) Credit risk reporting. d) None of these Answers. Option ‘'d' 2. Which one of the following duties is not performed by the credit risk manager? a) Monitoring and evaluating active accounts. b) Scenario analysis. c) Control the costs to operate the credit and collection ...