SAARC FINANCE, REGIONAL SEMINAR, ISLAMABAD
Credit Risk Management Process - Insights
•BOD must approve a Risk Appetite Statement, which will establish strategic risk management direction.
•Management must establish a forward looking defense control mechanism with risk triggers and pre-determined management actions.
•Management must also establish risk acceptance criteria.
•Risk assessment must be based on both financial and non financial factors.
•Risk assessment must look at both historical performance and forecast / projections.
•Cash flow and sensitivity analysis is necessary to assess down side risk.
•Risk mitigation and management of residual risk paramount.
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Identification, assessment, measurement, mitigating (through collateral and structuring), and booking risk, as well as determining how to best handle the residual risk.
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