This subject focuses on the management of credit risk. It examines the concept of credit risk and discusses the development of credit risk management. Importantly, it details an institutional framework for understanding how credit risk arises and how it is managed, especially in relation to ratings agency assessments and credit scoring. It examines the range of credit products and the risks associated with providing these products. This subject will particularly explore the issues that arise in assessing, managing and monitoring credit risk. From a practical perspective, the subject examines the lessons from some of the more prominent credit events of the past thirty years, including the Sub-Prime Credit Crisis of 2008. The subject focuses on the identification, measurement and mitigation of credit risk from the perspective of financial institutions, corporates and investors. Finally the subject also examines Basel II and III in regards to credit risk and how credit risk is regulated in Australia through the Australian Prudential Regulation Authority.
This subject contributes to the Risk Management major.