Uncertainty surrounding COVID-19 should compel credit analysts to incorporate operational risk as … [+]
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The severity and uncertainty surrounding COVID-19 globally should compel any credit professional to change existing corporate credit risk management frameworks. For decades, credit risk managers, credit analysts and underwriters analyzing companies have been trained to think like credit ratings analysts when creating and using corporate credit analysis frameworks to determine a corporate borrower’s credit quality.
Credit analysts and risk managers typically create corporate credit frameworks like those of global … [+]
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What is a corporate credit analysis framework? In a very abbreviated manner credit and ratings analysts develop frameworks that incorporate qualitative and quantitative information that they need to quantify what the probability of default of a borrower is and how severe their losses would be if a borrower defaulted. Credit analysis is typically top-down. That is, credit analysts start by analyzing country and economic…
