The Credit Decision (FRM Part 2 2023 – Book 2 – Chapter 1)

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After completing this reading you should be able to:
Define credit risk and explain how it arises using examples.
Explain the components of credit risk evaluation.
Describe, compare and contrast various credit risk mitigants and their role in credit analysis.
Compare and contrast quantitative and qualitative techniques of credit risk evaluation.
Compare the credit analysis of consumers, corporations, financial institutions, and sovereigns.
Describe quantitative measurements and factors of credit risk, including probability of default, loss given default, exposure at default, expected loss, and time horizon.
Compare bank failure and bank insolvency.