Advanced Credit Risk Analysis and Management

  • 9h 48m
  • Ciby Joseph
  • John Wiley & Sons (UK)
  • 2013

Credit is essential in the modern world and creates wealth, provided it is used wisely. The Global Credit Crisis during 2008/2009 has shown that sound understanding of underlying credit risk is crucial. If credit freezes, almost every activity in the economy is affected. The best way to utilize credit and get results is to understand credit risk.

Advanced Credit Risk Analysis and Management helps the reader to understand the various nuances of credit risk. It discusses various techniques to measure, analyze and manage credit risk for both lenders and borrowers. The book begins by defining what credit is and its advantages and disadvantages, the causes of credit risk, a brief historical overview of credit risk analysis and the strategic importance of credit risk in institutions that rely on claims or debtors. The book then details various techniques to study the entity level credit risks, including portfolio level credit risks.

Authored by a credit expert with two decades of experience in corporate finance and corporate credit risk, the book discusses the macroeconomic, industry and financial analysis for the study of credit risk. It covers credit risk grading and explains concepts including PD, EAD and LGD. It also highlights the distinction with equity risks and touches on credit risk pricing and the importance of credit risk in Basel Accords I, II and III. The two most common credit risks, project finance credit risk and working capital credit risk, are covered in detail with illustrations. The role of diversification and credit derivatives in credit portfolio management is considered. It also reflects on how the credit crisis develops in an economy by referring to the bubble formation. The book links with the 2008/2009 credit crisis and carries out an interesting discussion on how the credit crisis may have been avoided by following the fundamentals or principles of credit risk analysis and management.

The book is essential for both lenders and borrowers. Containing case studies adapted from real life examples and exercises, this important text is practical, topical and challenging. It is useful for a wide spectrum of academics and practitioners in credit risk and anyone interested in commercial and corporate credit and related products.

About the Author

Ciby Joseph (FCA, FRM) is a veteran credit and finance professional with two decades of banking experience. His expertise includes credit risk analysis, credit risk management, financial analysis, relationship management, Basel regulations, investment management, derivatives and feasibility studies. His banking exposure included banks such as CSB, HSBC and Lloyds TSB. University Rank holder (1989) and a recipient of a ‘Letter of Appreciation’ from HSBC (2003) for best credit risk analysis, Ciby headed the corporate credit risk of Lloyds TSB Middle East where he enjoyed corporate credit sanction authority. He is currently a Director at Crowe Horwath, UAE and a Partner of Transcend Investments & Credit Advisory, India. Ciby advises CEOs, CFOs and senior executives on optimum credit/borrowing strategies and participates in strategic assignments with respect to financing, debt syndication and risk management and conducts classes on credit risk. He has also contributed articles to various publications including Global Association of Risk Professionals, (GARP) USA.

In this Book

  • Credit Basics
  • Essentials of Credit Risk Analysis
  • Credit Risk Management
  • Fundamental Firm/Obligor-Level Risks
  • External Risks
  • Industry Risks
  • Entity-Level Risks
  • Financial Risks
  • Integrated View of Firm-Level Risks
  • Credit Rating and Probability of Default
  • Credit Risks in Project Finance
  • Credit Risks in Working Capital
  • Credit Portfolio Fundamentals
  • Major Portfolio Risks
  • Firm Risks to Portfolio Risks and Capital Adequacy
  • Credit Risk and the Basel Accords
  • Credit Risk Diversification
  • Trading of Credit Assets
  • Credit Derivatives
  • Pricing Basics
  • Pricing Methods
  • Security Basics
  • Collaterals and Covenants
  • Road to Credit Crisis
  • 2008 Credit Crisis
  • Bibliography
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