We highlight – via a series of posts on Credit Risk Management (Read the prelude – “Risk Management : How Can we Help You?“) – the ever-growing challenge of credit risk in financial institutions, the benefits of real-time analytics and the wave of change that can be brought about with Heckyl’s unique capabilities. We bring to you the first post, from the series.
Exposure to the probability of default by their debtors, also called as Credit Risk, is the major risk the global banking system is facing today. In the current volatile market condition, where Indian companies are confronted with issues like demand slowdown, unfinished projects set up at inflated costs, lengthening working capital cycle squeezing cash flows, it is not uncommon for an institution to default on payments. This leads to huge non-performing loans sitting on the banks’ balance sheets.
Financial Risk management
Broadly risk management consists of identification of the risks and taking suitable actions to counter or control them. Risk management’s objective is to assure uncertainty does not deviate the endeavour from the business goals. Within the details, financial risk management involves using financial instruments to manage exposure to risk, particularly credit risk and market risk. Read the rest of this entry »