INTRODUCTION

This five-day course provides participants with a clear understanding of what best practice credit risk management and analysis is and how it can support the achievement of business goals by ensuring that credit risks are only accepted where within risk appetite and that credit risks are effectively managed thereafter. This is done by looking in detail at the specific activities that form parts of the risk management framework and how these fit with an organisation’s overall governance of risk, it’s business strategy, group risk appetite/tolerance and regulatory constraints.

COURSE OBJECTIVES

At the end of this training course the student should be able to know:

·      About governance frameworks and how to make them effective

·      What regulatory requirements and expectations are and how they are changing

·      The external operating environment

·      The roles and responsibilities of business and credit risk management

·      How credit risk, and how it is managed, varies by customer and product type

·      Tools and techniques for managing credit risk

·      About risk types, how they interact and impact credit risk and how to address this

·      Understand the relationship between the qualitative and quantitative aspects of a credit analysis 

DURATION

5 Days

WHOW SHOULD ATTEND

·      Chief Credit Officers

·      Senior Business Heads

·      Senior Risk Managers/Analysts

·      Senior Credit Heads

·      Senior Product Managers

·      Senior Audit Managers

·      Investment professionals

·      Research analysts

·      Corporate bankers

·      Fixed income analysts

·      Credit analysts

COURSE CONTENT

DAY 1: THE GOVERNANCE FRAMEWORK

·      An overview of the governance framework

·      What is risk appetite and risk tolerance

·      Risk appetite and risk tolerance setting and implementation

·      Building and maintaining an effective risk management framework

·      Where credit risk management and credit risk committees fit

The Operating Environment

·      An overview of the operating environment within which banks accept and manage credit risk

·      The factors that have influenced the current operating environment

·      The causes and consequences of the financial crisis and their on-going impact

·      Basel III and other regulatory initiatives

·      Opportunities and threats – challenger banks and shadow banking

Stakeholder Management

• Who are the key internal and external stakeholders
• What are stakeholders’ interests
• Why stakeholders’ interests are different

·      Exercise: Management of conflicting interests

DAY 2: CREDIT RISK MANAGEMENT

·      An overview of credit risk and best practice credit risk management

·      Customer, product and risk types

·      Key elements of the credit risk management framework

·      Governance and credit risk

Managing Credit Risk

·      Models – review and approval of credit risk models, data issues

·      Product risks – product programme review and approvals

·      Controls –setting standards and monitoring compliance

·      Reporting – defining reporting requirements and regular monitoring

·      Audit reports – commissioning reviews and assessing audit findings

DAY 3: OVERVIEW OF CREDIT

·         Interaction of the market, the client and credit

·         Understanding market, credit and operational risks

·         The 5Ps and 5Cs of Credit

·         Shareholder Value Added

·         Risk/Reward and capital allocation

·         Purpose and Payback

Ratios and Credit Statistics

·         Advantages and Limitations of ratios

·         Types of Ratios including: profitability, asset quality and efficiency, leverage and coverage

·         Peer comparisons/Industry benchmarks

·         Specialized industry ratios

·         Seasonality

·         Overall performance ratios: DuPont formula

Additional Risks to Consider

·         Financial guarantees

·         Performance guarantees

·         Ratings triggers

·         Covenants

·         Revenue recognition

·         Unusual gains and losses

·         Asset write-offs

·         Swap exposures

·         FX exposure

·         Pension deficits

·         Securitization

·         Structural subordination

·         Partnerships/SPVs

·         Leases

·         Environmental

·         Product liability

DAY 4: CASH FLOW ANALYSIS

·         Structure of the cash flow statement

·         Sources and Uses

·         Reconciliations including PP &E, Intangibles, Investments, Deferred Taxes, Long term debt, Minority interest and Equity

Historical Financial Analysis

·         The Audit

·         Review of historical patterns and industry performance

·         Income Statement analysis

·         Balance Sheet analysis

·         Cash Flow analysis

DAY 5: CREDIT ANALYSIS FUNDAMENTALS

·         Corporates versus Financial Intermediaries

·         Specialized Industries

·         Specialized Products

·         Sources of information

Credit Risk Assessment and Management

• Approaches to assessing credit risk – individual judgement vs automated systems
• The credit risk cycle – assessment, decision making, post approval management
• Early warning signs – how to identify warning signs and how to address them
• Problem credit management – how to minimize the risk of losses

GENERAL NOTES

·         This course is delivered by our seasoned trainers who have vast experience as expert professionals in the respective fields of practice. The course is taught through a mix of practical activities, theory, group works and case studies.

• Training manuals and additional reference materials are provided to the participants.
• Upon successful completion of this course, participants will be issued with a certificate.
• We can also do this as tailor-made course to meet organization-wide needs. Contact us to find out more: training@data-afriqueconsultancy.org
• The training will be conducted at DATA-AFRIQUE TRAINING CENTRE, NAIROBI KENYA.
• The training fee covers tuition fees, training materials, lunch and training venue. Accommodation and airport transfer are arranged for our participants upon request.
• Payment should be sent to our bank account before start of training and proof of payment sent to: training@data-afriqueconsultancy.org