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Sofia
December 2, 2010
Overview of Credit Risk Management practices in banks
Basic concepts of the credit risk management
Monitor credit
performance Set credit risk
guidelines
Make credit
decisions Collect credit
Measure and data
assess credit
risk
Overview of Credit Risk Management practices in banks
Broad principles of credit risk management in Banks
Current risk profile (incl. the nature and aggregate amounts of risks)
of the borrower or counterparty and its sensitivity to economic and
market developments;
Internal factors
Financial risk
Assessment of the existing financial position
Assessment of the expected financial position
Accounting quality
Business risk
Market position
Operating Efficiency
Management risk
Management business expertise
Payment record
External factors
Conditions in the respective economic sector of activity
Economic trends in the industry of activity
Overview of Credit Risk Management practices in banks
Credit risk assessment tools
Expert judgment
Limits system
Portfolio Management
Rating based pricing
scenario analysis
default rate, recovery
rate risk based exposure limits
Rating system
expected loss charge,
capital charge
Overview of Credit Risk Management practices in banks
Approaches to Credit Risk Management