Banking
Early Warning Systems in Credit Risk Management
Taking risks is an essential element of banking business. Credit risk is, perhaps, one of the most significant components of risk faced by banks. Credit risk is the risk of […]
Taking risks is an essential element of banking business. Credit risk is, perhaps, one of the most significant components of risk faced by banks. Credit risk is the risk of loss to the banking resulting from borrower’s inability to meet payment obligations.
When credit quality of a borrower deteriorates, the loan becomes more and more risky. A borrower rated by bank as good may turn into bad over time due to several reasons. Before a healthy person becomes sick, we can see some symptoms of sickness with that person. Similarly, before quality of credit deteriorates, we may see some symptoms signifying borrower’s declining positions.
Banks design Early warning systems with an objective to provide warning, of possible and imminent problems in borrowers’ business, which may cause deterioration in credit quality. The need for early identification of problem loans is one of the principles of the Basle Committee for the management of credit risk.
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ldmahat
LD Mahat is a Chartered Accountant, Financial Adviser and Risk Management Specialist possessing over 29 years of diverse experience across several sectors covering a wide spectrum of assurance, business advisory and taxation disciplines. LD is a committed, highly motivated and result-oriented professional, consistently developing and nurturing client relationship and building long-lasting relationships with diverse clients. He has the ability to define issues, propose customized solutions that significantly add value and contribute to client’s success.
LD has got master’s in risk management form New York University, Stern Business School. He has undergone executive education at Harvard Business School and Insead Business School. He was risk management specialist in several Asian Development Bank Funded projects. He has provided risk management advisory services in various Nepalese corporate sectors.
LD has worked on large projects jointly with big 4 international accounting firms ~ PwC, Deloittee, Ernst & Young and KPMG in the field of Assurance, Diagnostic Review, Capacity Building, e-Government Procurement, e-Governance, Special Review, Investment Climate, and IFRS Implementation.