Advanced Credit Risk Analysis and Management

Abstract

The aim of this book is to present a thorough and comprehensive treatment of credit risk in a way that would be useful to everyone who is interested in credit risk analysis and management. The motivation for the book has emanated from the fact that during my two-decade-long tryst with credit risk management, I have met several people – bank officers, regulators, credit executives, credit officers, chief finance officers, finance managers and business students – who asked me to refer a good book on credit analysis. Firstly, the coverage of this book is more comprehensive, and especially describes the developments and challenges of today’s credit risk environment and covers the real nature of corporate credit risk and management in depth. Secondly, the credit risk perception of many – even at top management level – is blurred, resulting in unnecessary assumption of equity risk, which invariably results in higher credit risks without corresponding return. The various events related to the 2008 Global Credit Crisis that shook the financial world are an example. The exponential growth in credit and credit products in the recent decades has proven a big challenge not only to the leaders in finance but also to the bank regulators in several countries. Thirdly, businessmen, auditors, consultants, entrepreneurs and educators also yearn for a practical reference book on credit risk analysis and management. This book will be helpful to both lenders and borrowers in understanding the nature of credit risk analysis and management and will guide them to the prudent use of credit risk products and financial leverage, which is the hallmark of any successful business. The way corporate credit risk is analyzed and studied in this book is unique. It provides a thorough treatment on Credit Risk and discusses obligor risk, portfolio risk, capital requirement, credit pricing and Basel accords.