Effective Credit Risk Management

Effective Credit Risk Management

This course introduces the theory and practice in credit risk management, the application of credit scoring and the methods for credit scoring using scorecards. This course aims to bring learning related to certain techniques required for effective loan management and for compliance with capital requirement regulations.

  • Apply the principal decision making and control techniques essential to effective credit management.
  • Understand the effective management of credit-related operations and systems.
  • Understand the contribution of credit to the effectiveness of the overall management of the lending enterprise
  • Apply knowledge of how legislation, regulation and self-regulation, and the role and influence of external agencies
  • Apply knowledge and understanding to the daily running of credit analysis, credit operations, collections and recoveries functions

The course will utilize lectures with presentations and interactive class discussion. Trainees will also be encouraged to brainstorm ideas during seat works/activities.

  • Stages in Scorecard Construction
  • History of scoring and analytics – reason for credit scoring
  • Data Preparation and Different Types of Models
  • Overview of types (tailored versus generic) and uses of (application; behavioural; customer; collections and fraud) scoring throughout the credit cycle
  • Data sources for credit risk assessment
  • The legal, regulatory and supervisory environment (CCA, SCOR, Treating Customers Fairly, Responsible Lending); Impact of Basel II and capital adequacy requirements.
  • Risk appetite – Striking a balance between Marketing and Credit Risk
  • Developing and managing Credit Scoring Systems
  • Delivery Channels
  • Pre-screening
  • Data capture, automatic checks
  • Handling referrals, declines and appeals
  • Safe card dispatch
  • Decline management
  • Fraud control – online techniques
  • Using Automated Decision-making systems
  • Transactional fraud control
  • Money laundering
  • Judgmental lending versus credit scoring
  • Measuring Performance
  • Linear Regression and Discriminant Analysis
  • Logistic Regression
  • Model Implementation
  • Authorizations
  • Control processes for granting additional credit
  • Behavioral Scoring
  • Development and Maintenance of Behavior scorecards
  • Portfolio Management and Management information
  • Performance drivers
  • Practical Issues
  • Monitoring and Tracking

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