Standard I (E) Competence
Brief Introduction on the Standards Guidance Standard I(E) mandates that members and candidates must act with and maintain appropriate knowledge, skills, and diligence while performing their professional responsibilities. This is essential to deliver a high standard of service to clients…
Behavioral Biases
Behavioral Biases Loss aversion refers to the irrational dislike of losses in a portfolio. It manifests when an investor, despite recognizing a stock’s positive metrics and including it in their portfolio, impulsively sells it when it faces a downturn. Goals-based…
Introduction to Credit Risk Modeling and Assessment
After completing this reading, you should be able to: Explain the capital adequacy, asset quality, management, earnings, and liquidity (CAMEL) system used for evaluating the financial condition of a bank. Describe quantitative measurements and factors of credit risk, including probability…
Credit Risk Measurement and Management (2024)
CR-1-Fundamentals of Credit Risk CR-2-Governance CR-3- Credit Risk Management CR-5-Introduction to Credit Risk Modeling and Assessment CR-6-Credit Scoring and Rating CR-8-Sovereign Default Risk (Country Risk) CR-10-Credit Value at Risk CR-12-Credit Risk CR-13-Credit Derivatives CR-18-Central Clearing 2
Credit Risk
After completing this reading, you should be able to: Assess the credit risks of derivatives. Define credit valuation adjustment (CVA) and debt valuation adjustment (DVA). Calculate the probability of default using credit spreads. Describe, compare, and contrast various credit risk…
Credit Value at Risk
After completing this reading, you should be able to: Compare market risk value at risk (VaR) with credit VaR in terms of definition, time horizon, and tools for measuring them. Define and Calculate Credit VaR. Describe the use of rating…
Credit Risk Management
After completing this reading, you should be able to: Describe key elements of an effective lending or financing policy. Explain the importance and challenges of setting exposure and concentration limits. Describe the scope and allocation processes of a bank’s credit…
The Credit Suisse CoCo Wipeout: Facts, Misperceptions, and Lessons for Financial Regulation
After completing this reading, you should be able to: Describe the features and mechanics of contingent convertible bonds (CoCos) and explain the rationale for banks to issue them. Explain the rescue of Credit Suisse by Swiss regulators in 2023 and…
Financial Risk Management and Explainable, Trustworthy, Responsible AI
After completing this reading, you should be able to: Describe the challenge posed by potential model bias and the ethical and responsible considerations surrounding the implementation of AI-driven solutions in financial risk management. Analyze the potential benefits and challenges of…
Case Study: Model Risk and Model Validation
After completing this reading, you should be able to: Define a model and describe different ways financial institutions can become exposed to model risk. Describe the role of the model risk management function and explain best practices in the model…
