We recognize two types of risk arising from allowing unexpected loss to become too large. One type is "credit concentration risk," which stems from granting excessive credit to certain individual counterparties or corporate groups. The other type is "chain–reaction default risk," which arises from granting excessive credit to certain areas, industrial sectors and other groupings. We make appropriate management to control these risks in line with our specific guidelines for each. The individual risk management departments of the two banks are responsible for monitoring adherence to these guidelines and reporting to their respective business policy committees.
Risk management occurs everywhere in the financial world. It occurs when an investor buys low-risk government bonds over more risky corporate bonds , when a fund manager hedges his currency exposure with currency derivatives and when a bank performs a credit check on an individual before issuing a personal line of credit . Stockbrokers use financial instruments like options and futures , and money managers use strategies like portfolio and investment diversification , in order to mitigate or effectively manage risk.
The Credit Risk Management Platform is a robust and scalable software solution for credit risk management. The platform is used by banks, financial service providers, and corporations for assessing and managing credit risks. Core features of the platform include capturing and spreading financial statements as well as a flexible framework for the implementation of internal rating and scoring models. Based on an in-depth risk assessment, the platform enables the implementation of complex strategies and workflows for credit origination and monitoring. A built-in simulation environment allows users to analyze changes to the underlying risk models and sustainably optimize those models.