- Do you feel somewhat lost in risk rating systems and the way they generate ratings?
- Is it challenging for you to evaluate quantitative and qualitative issues from a credit risk perspective?
- Are you finding it difficult to translate Basel Guidelines into a practical Risk Management process?
- Would you like to easily detect problems long before a default occurs?
If you’ve answered yes to any of the above questions, then this Credit Risk Management online course is for you.6 Sigma’s Credit Management series are intended to introduce methodologies that makes credit analysis easier, more focused, more accurate, and streamlined, in terms of making a decision. These methodologies help determine the quality of obligors, the exposure that is appropriate to them in line with their risks, and the level of pricing that should be imposed to balance this risk. They also tie in seamlessly with portfolio management, early problem recognition, and the optimization of capital adequacy.
Once you have analyzed the obligor using both quantitative and qualitative criteria, we need to summarize the analysis into some rating that reflects its risk profile. Once assessed and profiled, all the obligors will play a role in the overall riskiness of a bank’s portfolio, hence the amount of capital needed from the bank’s shareholders to support this risk. To date, much has been written on defaults, losses, and portfolio management, not least by the Basel Committee. These series of modules are intended to compliment what has been written, and to introduce practical ways of administering controls to manage them in your daily business.
As per Basel guidelines, if you aspire to become IRB compliant, and there are many reasons why you should, not least because it helps optimize the use of capital for Credit Risk, you are required to predict the Probability of Default of obligors. Ultimately this will lead you to adopt the IRB Approach under Basel guidelines that helps (a) measure risk at obligor and portfolio levels, and (b) reduce your capital adequacy if combined with appropriate Credit Process and Procedure doctrines.
The course is designed to (a) provide you with an increased appreciation of the risks that are not necessarily numerical in nature, (b) help you understand the reasons behind defaults, (c) clarify the requirements of Basel Accords from a practical perspective, and (d) recognize the lagging and leading indicators of problems.
Our Credit Risk Rating process provides you with a practical way to:
- Implement Basel guidelines in your credit decision-making process
- Learn about studies conducted by international banks and how to apply these studies into your workplace
- Apply procedures to capture defaults for compliance with the IRB methodology.
The course provides a practical way to apply the principles of credit and implement Basel guidelines within the credit decision-making process. It also covers all the qualitative criteria that contribute to credit risk but are often overlooked.
From a business strategy perspective, the course shows you how to implement strategies that account for risk and how to identify target markets that fit within the bank’s scope and vision. It showcases how to formulate the risk acceptance criteria for a given market segment.
This course will help you reduce the guesswork in the credit risk process and quantify as objectively as possible all the risk factors, quantitative and qualitative, in calculating a credit risk rating. It will also allow you be quick in detecting early problem red-flags that will help you take action before a client defaults.
The Credit Risk Rating E-Learning course covers the following curriculum:
- Credit Process
- Principals of Credit
- Business Strategy.
- Target Market & Risk Acceptance Criteria.
- Qualitative Analysis.
- Introduction to Basel
- Risk and Capital
- Banking Business Model
- Issues Relating to Cost of Credit
- Common Reasons for Corporate Failures
- Estimating Probability of Default – Corporate et al
- How to Reduce Probability of Default
- How to Reduce Loss Given Default
- Empirical Data from International Banks
- Probability of Default – Measurement
- Probability of Default – Transitions
- Probability of Default – Long Term
- Components of LGD
- What Basel Addresses on LGDs
- Effects of Mitigants
- Addressing Emerging Problems Pro-actively – Early Problem Recognition and Remedial Management
This course carries exercises related to each section, is valid for 3 months, and provides for a quiz at the end.
After completing this course, you can expect to:
- Understand and apply Basel guidelines in the credit decision making process
- Incorporate the qualitative factors into the credit risk calculation
- Identify suitable target market and formulate Risk Acceptance Criteria for each
- Strengthen your ability to recognize early problem signs and take appropriate action
This program is for you if any of the following scenarios apply:
- You are a seasoned relationship manager and want to gain a better understanding of Basel guidelines and how it impacts the credit decision making process or you want to become more confident in credit risk
- You are an SME Relationship Manager and you would like to create Target Market and Risk Acceptance Criteria for your SME portfolio
- You are a new Relationship Manager and you want to learn all about the credit risk rating
- You are a Risk Manager or Credit Auditor and want to better understand how the credit-risk rating process works
- You are someone who has a general interest in credit risk and would like to learn more about it