Credit Risk Management
Credit Risk Management denotes a broad collection of principles, tools, processes and management roles that aim to underpin the management of Credit Risk, most typically (but not necessarily) in the context a Credit Portfolio.
Credit Risk Management is a superset of Credit Portfolio Management, with the later term being used when intending to place emphasis on portfolio aspects.
A decomposition of credit risk management into elements has been provided in the Loan Portfolio Management handbook
- Assessment of the Credit Culture,
- Portfolio objectives and risk tolerance limits,
- Management information systems,
- Portfolio segmentation and risk diversification objectives,
- Analysis of loans originated by other lenders,
- Aggregate policy and underwriting exception systems,
- Stress testing portfolios,
- Independent and effective control functions,
- Analysis of portfolio risk/reward tradeoffs.
- Loan Portfolio Management Comptroller’s Handbook, April 1998 (Updated June 26, 2017, for Non-accrual Status)