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