Overview

This eCourse consists of two modules. Module 1 describes in detail the reasons why managing credit risk is so important to banks, from low margins on loan products to making the best use of scarce capital resources. The module also details the common failings of banks when it comes to managing credit risk, including not heeding the lessons learned from previous events to a tendency to look at situations from a single risk perspective.

Module 2 explains why establishing and maintaining an effective credit risk management framework is a necessary condition if a bank is to achieve its objectives by only taking on and then managing those risks that are within credit risk appetite. The module also describes the various elements of a bank’s credit risk management framework, including credit policies, processes, people, authorities, and infrastructure.

Objective

On completion of this course, you will be able to:
- Recognize the importance of sound credit risk management within banks
- Identify the common failings of banks in relation to managing credit risk
- Describe the concept of credit risk appetite in the context of a framework for managing credit risk
- Outline the key elements of a bank’s credit risk management framework

Content

Module 1: Credit Risk Management - An Introduction
Topic 1: Why Managing Credit Risk is Important
Topic 2: Common Failures of Credit Risk Management

Module 2: Credit Risk Management - Framework
Topic 1: Credit Risk Appetite & Management Framework
Topic 2: Credit Risk Management Framework