Credit Risk Analysis
From Open Risk Manual
Definition
Credit Risk Analysis denotes a set of concepts, tools and processes that are associated with the organized extension of credit (e.g., lending) by an organization. The objective of credit risk analysis is to evaluate qualitative and quantitative aspects of credit risk and thereby support decision making (Credit Origination, Credit Portfolio Management).
Methodologies
There is a wide range of methodologies to assist with sound credit risk analysis. One of the popular frameworks is the Five Cs Of Credit Analysis. In general the methodologies vary depending on the type of borrower. A classification that is based on regulatory guidelines is as follows[1]
- Generic Retail Credit Risk Analysis
- Retail Mortgage Credit Risk Analysis
- Non-Real Estate Secured Lending to Consumers
- Unsecured Retail Credit Risk Analysis
- SME Credit Risk Analysis
- Corporate Credit Risk Analysis
- Commercial Real Estate Lending Credit Risk Analysis
- Commercial Real Estate Development Risk Analysis
- Leveraged Transactions Credit Risk Analysis
- Shipping Finance Credit Risk Analysis
- Project Finance Credit Risk Analysis
See Also
References
- ↑ EBA, Guidelines on loan origination and monitoring EBA/GL/2020/06