Financial Products & Associated Risk Management

Credit Risk - Part 1 (2023)


This eCourse consists of two modules on Credit Risk. Module 1 outlines how credit risk is generated by the business of financial institutions, as well as the structures these institutions should have in place to manage this risk. It describes in detail the entire credit risk lifecycle, from risk assessment through to ongoing risk reporting and monitoring. The tutorial also explains why it is important for banks to look beyond credit risk and take into account other risks such as market and operational risk when making credit decisions.

Module 2 describes different risk types and the characteristics that determine whether a particular credit risk falls into one risk type or another. It goes beyond the credit risks that arise in the traditional banking book to examine those that arise in the trading book and the regulatory and risk management implications of this distinction. The tutorial also describes in detail how banks segment different customer types and why this differentiation matters from a credit risk point of view.


On completion of this course, you will be able to:
- Identify how credit risk arises and the key factors that influence the size of credit risk exposures
- Define a credit risk exposure, recognize the factors that give rise to such exposures, and recall how exposures are measured and graded
- Identify the main regulatory capital requirements for credit risk
- Recognise the importance of an effective risk management framework for credit risk and its key components
- Distinguish between the different types of credit risk, including the difference between direct and contingent credit risks, as well as those that arise from settlement, trading, and underwriting activities
- Recognise the different credit risk customer types and the importance of differentiating between these customer types
- Identify how credit risk arises in both the banking book and the trading book and the significance of this distinction
- List the different types of asset class as defined by regulators


Module 1: Credit Risk - An Introduction
Topic 1: Overview of Credit Risk
Topic 2: Credit Risk Exposure
Topic 3: Regulatory Requirements for Credit Risk
Topic 4 Credit Risk Management

Module 2: Credit Risk - Types & Asset Classes
Topic 1: Overview of Credit Risk
Topic 2: Key Types of Credit Risk
Topic 3: Customer Types
Topic 4: Asset Classes


Relevant Subject
Type 1 - Dealing in securities
Type 2 - Dealing in futures contracts
Type 3 - Leveraged foreign exchange trading
Type 4 - Advising on securities
Type 5 - Advising on futures contracts
SFC:2.00, PWMA:2.00
Chinese Securities Association of Hong Kong (HKCSA): HK$670
All Member: HK$640
Staff of Corporate Member: HK$640
Non-Member: HK$960