Financial Products & Associated Risk Management

Credit Risk Management - Part 3


This eCourse consists of two modules. Module 1 describes in detail how a bank’s credit culture drives behavior. It looks at both appropriate and inappropriate staff behaviors as well as a number of common risk culture failures. Some examples of high-profile events where weak risk cultures were a root cause are discussed. Finally, the module also outlines many of the difficulties and challenges in creating and sustaining a strong credit culture.

Module 2 describes the various sources of revenue for banks, including both interest and noninterest income. It looks in detail at the factors influencing loan pricing, in addition to calculations for relationship earnings, risk-adjusted earnings, and return on capital employed (ROCE).

Module 3 describes the importance of credit data to a bank’s business, the challenges and issues associated with data capture and data ownership, and the factors to be considered when turning credit data into information. The module also explains how complete, accurate, and timely credit risk reporting – customer level, portfolio level, and statutory reports – are vital if a bank’s business and credit staff are to understand and manage credit risks.


On completion of this course, you will be able to:
- Explain how a bank’s credit culture – strong or weak – drives staff behavior
- Describe the key issues surrounding the creation and maintenance of a strong credit culture
- Describe the various sources of income for banks and the main factors affecting loan pricing and revenue
- Explain the importance of measuring risk-adjusted returns and why they are more meaningful at a portfolio level than a customer level
- Explain why banks need credit data, some of the issues surrounding credit data capture, and the requirements for turning credit data into information
- Describe the various credit risk reports produced by banks, including customer level, portfolio level, and statutory reports


Module 1: Credit Risk Management - Credit Culture
Topic 1: Culture & Behavior
Topic 2: Improving the Credit Culture

Module 2: Credit Risk Management - Risk/Reward
Topic 1: Sources of Revenue
Topic 2: Risk-Adjusted Returns

Module 3: Credit Risk Management - Data & Reporting
Topic 1: Credit Data
Topic 2: Credit Risk Reporting


Relevant Subject
SFC:2.50, PWMA:2.50
Staff of Corporate Member: HK$765
Non-Member: HK$1115
All Member: HK$765