Credit Risk Specialist Course

Lesson 1 • Credit Risk in the Financial System

Examines how credit risk aggregates into systemic risk and historical crises. Motivates rigorous risk management as a systemic necessity.

Lesson 2 • The Credit Lifecycle

Maps the end-to-end journey of a credit facility from origination to resolution. Connects risk events to specific lifecycle stages.

Lesson 3 • Sources and Types of Credit Exposure

Catalogs loan, bond, derivative, and off-balance-sheet exposures. Provides the exposure taxonomy used throughout the course.

Lesson 4 • Defining Credit Risk

Establishes precise definitions of credit risk, default, and loss. Anchors all subsequent analysis in shared terminology.

Lesson 1 • Reading the Balance Sheet

Decodes asset quality, liability structure, and equity cushion for credit assessment. Establishes the balance sheet as the primary solvency document.

Lesson 2 • Income Statement and Cash Flow Analysis

Extracts debt-service capacity from earnings and cash flow statements. Links profitability metrics to actual repayment ability.

Lesson 3 • Key Credit Ratios and Metrics

Builds a ratio toolkit covering leverage, coverage, and liquidity. Ratios are interpreted in context rather than in isolation.

Lesson 4 • Adjustments and Normalization

Corrects reported figures for non-recurring items, accounting choices, and off-balance-sheet obligations. Produces comparable, analyst-grade financials.

Lesson 1 • Management and Governance Quality

Assesses leadership track record, governance structures, and ownership incentives. Poor governance is a leading indicator of credit deterioration.

Lesson 2 • Industry Structure and Dynamics

Applies competitive analysis frameworks to assess industry-level credit risk. Industry position shapes a borrower's ability to sustain cash flows.

Lesson 3 • Macroeconomic and Sector Sensitivity

Links macroeconomic variables to sector-specific credit performance. Enables stress testing based on realistic economic scenarios.

Lesson 4 • Integrating Qualitative and Quantitative Findings

Synthesizes financial ratios with qualitative assessments into a unified credit view. Produces a structured credit opinion ready for committee review.

Lesson 1 • Model Validation and Backtesting

Establishes rigorous validation standards for credit models including discrimination and calibration tests. Ensures models remain fit for purpose over time.

Lesson 2 • External Ratings and Agency Methodologies

Decodes rating agency methodologies, notching, and rating transitions. Enables critical use of external ratings alongside internal assessments.

Lesson 3 • Internal Rating Systems

Covers the architecture of internal rating scales, master scales, and rating philosophy. Connects internal ratings to regulatory capital requirements.

Lesson 4 • Principles of Credit Scoring

Introduces statistical foundations of scorecard development and their role in credit decisions. Establishes the link between scores and default probability.

Lesson 1 • Probability of Default Estimation

Derives PD estimates from historical data, market signals, and structural models. Provides the primary input for expected loss calculations.

Lesson 2 • Loss Given Default Concepts

Quantifies the fraction of exposure lost after recovery efforts. Connects collateral quality, seniority, and workout strategy to LGD.

Lesson 3 • Stress Testing Credit Parameters

Applies scenario analysis to shift PD, LGD, and EAD under adverse conditions. Produces stressed loss estimates used in capital planning.

Lesson 4 • Expected and Unexpected Loss

Combines PD, LGD, and EAD into expected loss and links unexpected loss to economic capital. Bridges parameter estimation to portfolio-level risk management.

Lesson 1 • Risk Appetite and Limit Frameworks

Translates board-level risk appetite into operational credit limits and triggers. Ensures portfolio decisions remain within sanctioned risk boundaries.

Lesson 2 • Credit Correlation and Copula Models

Introduces default correlation, asset correlation, and copula-based portfolio models. Explains why correlation drives tail losses beyond expected loss.

Lesson 3 • Credit Risk Transfer Instruments

Covers credit default swaps, securitization, and loan sales as portfolio management tools. Evaluates the risk reduction and basis risk of each instrument.

Lesson 4 • Credit Value at Risk and Economic Capital

Computes portfolio-level Credit VaR and allocates economic capital to individual exposures. Links portfolio modeling to capital adequacy and pricing.

Lesson 1 • Regulatory Capital Fundamentals

Explains the purpose of minimum capital requirements and the structure of regulatory capital tiers. Provides the regulatory context for all subsequent capital calculations.

Lesson 2 • Standardized Approach to Credit Risk

Applies external ratings and supervisory risk weights to calculate credit risk capital under the standardized approach. Covers the most widely used regulatory method globally.

Lesson 3 • Disclosure, Reporting, and Compliance

Addresses Pillar 3 disclosure requirements, regulatory reporting obligations, and compliance governance. Ensures students can design transparent and audit-ready credit risk reporting.

Lesson 4 • Supervisory Review and Pillar 2

Covers the supervisory review process, internal capital adequacy assessment, and Pillar 2 add-ons. Prepares students for regulatory examinations and dialogue.

Lesson 1 • Enforcement and Collateral Realization

Covers enforcement options, collateral liquidation, and security realization processes. Maximizes recovery when restructuring is not viable.

Lesson 2 • Write-Off, Recovery, and Portfolio Lessons

Manages the write-off decision, post-write-off recovery, and portfolio-level lessons learned. Closes the credit lifecycle and feeds insights back into underwriting standards.

Lesson 3 • Restructuring and Forbearance Strategies

Designs debt restructuring solutions including maturity extensions, rate reductions, and debt-for-equity swaps. Balances borrower viability against lender recovery objectives.

Lesson 4 • Early Warning and Credit Monitoring

Identifies behavioral, financial, and market signals that precede default. Early detection is the primary lever for reducing loss given default.