Credit Risk Management Practice Exam
Credit Risk Management Practice Exam
About Credit Risk Management Exam
The Credit Risk Management Exam assesses a candidate's knowledge and expertise in identifying, analyzing, and mitigating credit-related risks in financial institutions and businesses. It covers principles, policies, and tools used to manage credit exposure across various sectors.
Who should take the Exam?
This exam is ideal for:
- Credit analysts and loan officers
- Risk management professionals in banking and NBFCs
- Finance managers responsible for credit portfolios
- Students and graduates of finance, banking, or economics
- Auditors and compliance officers focusing on credit risk
- Professionals preparing for roles in credit risk modeling
Skills Required
- Strong understanding of credit risk concepts and financial instruments
- Analytical skills for assessing borrower creditworthiness
- Knowledge of risk mitigation tools such as guarantees and collateral
- Familiarity with credit scoring models and rating systems
- Ability to interpret financial statements and ratios
Knowledge Gained
- Understanding of credit risk assessment and control mechanisms
- Familiarity with credit risk modeling techniques
- Application of risk-adjusted return on capital (RAROC)
- Strategies for managing non-performing assets (NPAs)
- Credit policy formulation and implementation
Course Outline
The Credit Risk Management Exam covers the following topics -
Domain 1 – Fundamentals of Credit Risk
- Definition and types of credit risk
- Importance of credit risk in financial systems
- Key terminologies and concepts
Domain 2 – Credit Risk Assessment
- Borrower evaluation and credit scoring
- Financial statement analysis
- Credit rating and internal grading systems
Domain 3 – Credit Risk Mitigation Techniques
- Collateral management and guarantees
- Credit derivatives and risk transfers
- Legal and regulatory frameworks
Domain 4 – Credit Portfolio Management
- Portfolio diversification and concentration risk
- Loan exposure limits and sectoral caps
- Credit portfolio analytics
Domain 5 – Credit Risk Measurement Models
- Probability of default (PD), loss given default (LGD), and exposure at default (EAD)
- Expected loss and economic capital
- Use of models like CreditMetrics and KMV
Domain 6 – Regulatory Guidelines and Compliance
- Basel I, II, and III guidelines on credit risk
- Capital adequacy norms and stress testing
- Risk governance and internal controls
Domain 7 – Monitoring and Recovery
- Early warning signals and risk triggers
- Loan monitoring and review mechanisms
- NPA management and recovery strategies
Domain 8 – Credit Risk in Specialized Areas
- Retail vs corporate credit risk
- Credit risk in project finance and SMEs
- Securitization and structured finance products
