New perceptions: how insurers must raise their game in credit risk management

The recent financial crises have changed the way insurers and asset managers view credit risk, revealing a fundamental misunderstanding of the risk in many companies’ portfolios. Risk managers have had to raise their game in terms of how credit risk is assessed and managed. Clive Davidson reports

Senecio by Paul Klee

With the eurozone teetering on the brink of a sovereign default and credit agency ratings now taken with large pinches of salt, credit risk management has come in for a fundamental review. But, many of those most closely involved with managing credit risk say the issue is less that the risk itself has changed, and more that the perception of it has become more acute.

Traditionally, insurers have invested significantly in portfolios of government and corporate bonds. Managing the credit risk of

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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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