Credit Risk Management – Learn the Industry

Learn financial analysis, calculating exposure, forms of security (letters of credit,etc.) and credit ratings.

What you’ll learn
✓ Understand credit terms in contracts and security forms (such as letters of credit, guarantees and surety bonds), and how they tie into a credit risk policy.
✓ Understand the financial review process, including forms to review, important numbers to look for, financial ratio calculation and what they mean.
✓ Understand credit ratings, such as Moody’s, S&P, D&B and AM Best. Also, how to create your own internal credit rating if a company is not rated.
✓ Calculate exposure using different methods such as a simplistic 2-month exposure, to a Potential Future Exposure (PFE) and margining under a forward contract.

Requirements
● Anyone that is drive to learn. I think it would be beneficial if you had some post-high school education/experience.

Description
This course contains the use of artificial intelligence in order to create draft forms of security forms (letters of credit, guaranty and surety bond) and credit policy.

Parameters of the security forms and credit policy were entered into an AI tool in order to generate a base, which I then edited to match industry standard documents.

At no time was AI used for any of the lecture materials (commentary, slides, etc.)

This course will teach all facets of the credit risk management field. The course is designed for any one curious about the field for credit risk, taught in an approachable way.

I will begin with how to develop a strong credit risk policy, detailing important sections to help mitigate risks to your company. After establishing this base, I will touch on each of the points below

Credit ratings: What S&P and Moody’s ratings are, as well as AM Best and D&B scores. How the ratings determined. The difference between investment grade and non-investment grade. How a market implied credit rating, based on a credit default swap, works.

Internally derived credit ratings: Producing a credit rating based on peer group analysis. Designing a scorecard-based credit rating.

Financial Analysis: Review the different financial reporting forms. Discuss the key factors while performing a financial review (and how to avoid elevator analysis.) The course will cover debt, liquidity, profitability and cash flow. Also, how to calculate important ratios based on the financial statements.

Forms of security: The difference (pros/cons) between letters of credit, guarantees and surety bonds. How each form is issued and amended.

Exposure: How to calculate exposure across different contract types. Risk mitigants for the different contract exposures.

Contract Terms: What are the main terms when looking at credit risk management. The course will review downgrade triggers, defaults, remedies and terminations.

Margining: How to margin under a forward contract. The ins and outs of daily margining detailed through a few examples.

Additionally, the course comes with several files to review, including: a spreadsheet detailing a high-level financial review (with formulas built in), draft forms of security (letters of credit, surety bond, and guaranty) and a draft version of a credit risk policy.

Who this course is for
■ I think this course is designed for people from all walks of life. This course would be beneficial to those looking to find a position in credit risk, or in corporate finance. Whether this is a college student who is graduating soon, or a person looking to start a new career path. Take this information, along with a basic understanding of excel, and you could work in a Fortune 500 company.
■ This class isn’t just for those looking to break into the credit risk field. If you work in sales or another business unit that works with credit risk, it can be used to shed light on credit’s processes.

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