Avoiding over-exposure

Credit Risk

While it has reduced the cost of gas and electricity for the consumer, European energy market liberalisation has brought increased credit risk for energy and power producers and traders.
And it is not difficult to see why. It is little more than three years since only a handful of companies traded electricity in Europe. They knew each other well and, as state monopolies, they faced no danger of bankruptcy even if they may have had the occasional cashflow problem – their respective governments

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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