Credit Risk refers to the probability of loss due to a borrower’s failure to make payments on any type of debt. Credit risk management, meanwhile, is the practise of mitigating those losses by understanding the adequacy of both a bank’s capital and loan loss reserves at any given time – a process that has long been a challenge for financial institutions.

The global financial crisis – and the credit crunch that followed – put credit risk management into the regulatory spotlight. As a result, regulators began to demand more transparency. They wanted to know that a bank has thorough knowledge of customers and their associated risk. And new Basel III regulations will create an even bigger regulatory burden for banks.

To comply with the more stringent regulatory requirements and absorb the higher capital costs for credit risk, many banks are overhauling their approaches to credit risk. But banks who view this as strictly a compliance exercise are being short – sighted. Better credit risk management also presents an opportunity to greatly improve overall performance and secure a competitive advantage.

This course offers you an introduction to credit risk modelling and hedging. We will approach credit risk from the point of view of banks, but most of the tools and models we will review can be beneficial at the corporate level as well. At the end of the course, you will be able to understand and correctly use the basic tools of credit risk management, both from a theoretical and, most of all, a practical point of view.

Key topics covered include:

• The definition and the implications of credit risk for banks and other financial institutions
• The most recent risk regulations for banks: Basel II and Basel III
• How to critically use basic measures of risk like Value-at-Risk and Expected Shortfall: computation and interpretation
• The definition and the use of credit ratings
• How to define the probability of default of a counterparty
• The basics of Credit Default Swaps (CDS)
• What stress-testing is and why it is useful

Who should attend?

• Relationship Managers
• Credit Officers
• Finance Personnel

Duration

• 2 days

Get in touch with us on info@trainingsolutions.co.ke for more information