Duration 3 days – 21 hrs
Overview.
The Credit Risk Management Training Course is designed to provide financial professionals with a comprehensive understanding of credit risk management, covering key areas such as borrower risk assessment, loan structuring, credit portfolio management, and the management of non-performing loans (NPLs). Participants will also gain insights into regulatory frameworks, including Basel III requirements, and develop practical skills in stress testing and recovery planning.
Objectives
- Understand fundamental credit risk concepts and their importance in financial institutions.
- Apply credit risk measurement models to assess the probability of default (PD), loss given default (LGD), and exposure at default (EAD).
- Develop effective loan structures and risk mitigation strategies to minimize exposure.
- Manage credit portfolios effectively by identifying diversification opportunities and controlling concentration risks.
- Understand and implement Basel III requirements for credit risk and capital adequacy.
- Conduct stress testing for credit portfolios to evaluate the impact of economic downturns.
- Develop strategies for managing non-performing loans (NPLs) and implementing recovery plans.
- Prepare recovery and resolution plans to ensure financial stability during times of distress.
Audience
- Credit Risk Managers: Professionals responsible for the oversight of credit risk in banks and financial institutions. This course will enhance their ability to implement and manage effective credit risk strategies.
- Loan Officers: Individuals who assess and approve loans for corporate and retail clients. They will benefit from learning how to apply credit risk models, structure loans, and reduce exposure to default.
- Credit Analysts: Analysts who evaluate the creditworthiness of borrowers and assess the risk associated with lending. This course will provide advanced tools for risk measurement and analysis.
- Portfolio Managers: Professionals who manage credit portfolios, ensuring balanced risk across loans. They will gain insights into credit portfolio management techniques and risk mitigation strategies.
- Risk Management Officers: Professionals tasked with identifying, analyzing, and mitigating risks in financial institutions. This course will enhance their knowledge of Basel III requirements and stress testing for credit risk.
- Compliance Officers: Individuals responsible for ensuring that their organization complies with regulatory standards, including Basel III and other credit risk-related guidelines.
- Corporate Bankers: Relationship managers and bankers involved in structuring credit solutions for corporate clients. This course will provide valuable insights into borrower risk assessment and loan structuring.
- Internal Auditors: Professionals auditing credit risk policies and procedures. They will benefit from understanding how to evaluate the effectiveness of credit risk management frameworks.
- Asset and Liability Managers (ALM): Managers responsible for maintaining a financial institution’s balance sheet, especially with regard to credit risk exposure and managing liquidity risks.
- Senior Executives in Risk Management: Executives involved in high-level decision-making around risk management strategies, including credit risk policies, risk appetite, and capital adequacy.
- Banking Consultants and Advisors: Consultants advising financial institutions on credit risk management strategies, loan structuring, and compliance with regulatory requirements.
- Financial Regulators: Regulators who oversee credit risk practices in financial institutions and ensure adherence to national and international guidelines, including Basel III.
Pre- requisites
- Basic understanding of risk management principles.
- Experience in banking operations, finance, or risk-related roles.
- Professionals currently involved in or transitioning to operational risk management roles.
Course Content
Introduction to Credit Risk Management
- Definition of credit risk and its significance in financial institutions
- Overview of key concepts: risk assessment, loan structuring, and NPL management
- The credit risk management process
Credit Risk Measurement Models
- Overview of quantitative and qualitative credit risk models
- Probability of default (PD), Loss given default (LGD), and Exposure at default (EAD)
- Credit scoring and rating models for individuals and businesses
- Internal ratings-based (IRB) approaches
- How to apply credit risk models in lending decisions
Loan Structuring and Risk Mitigation Techniques
- Principles of loan structuring to minimize risk
- Types of loan products and their risks (e.g., corporate, retail, SME loans)
- Use of covenants, collateral, and guarantees
- Techniques for minimizing risk during the loan origination process
Credit Portfolio Management
- Fundamentals of portfolio risk management
- Diversification and concentration risk
- Managing credit risk across different sectors and geographies
- Tools for monitoring and controlling credit portfolio risk
Basel III Requirements for Credit Risk
- Overview of Basel III framework and its implications for credit risk management
- Minimum capital requirements and credit risk capital charge
- Credit risk mitigation techniques under Basel III
- Importance of risk-weighted assets (RWA) and leverage ratio
- Capital buffers and liquidity requirements
Stress Testing for Credit Risk
- What is stress testing, and why is it essential for credit risk management?
- Methods for conducting stress tests on credit portfolios
- Scenario analysis and sensitivity analysis
- Assessing the impact of economic downturns on borrower default rates and credit losses
- Regulatory requirements for stress testing under Basel III
Dealing with Non-Performing Loans (NPLs)
- Causes of non-performing loans and early warning signals
- Strategies for managing and reducing NPLs
- Loan restructuring and workout strategies
- Legal considerations in dealing with NPLs
- Best practices for NPL recovery
Recovery and Resolution Planning
- Understanding the importance of recovery and resolution planning
- Key elements of an effective recovery plan
- Resolution tools and strategies for distressed financial institutions
- The role of regulators in resolution planning
- Case studies: successful recovery and resolution planning in the Philippines banking sector