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Tag: credit risk course

It’s all about strategy: Cultivate a credit risk management strategy in 2022

Posted on by Imarticus Learning

Risks are part and parcel of any institution because a business cannot grow without taking risks. A business entity has to take the calculative risk to expand. But taking risk is different, and managing it is entirely different. Effective risk management is a comprehensive and detailed view of risk across organizational decisions.

A risk management program creates transparency and understanding of risks while identifying the risk management framework. Therefore, through the CRU program at Imarticus, we teach to identify, manage and monitor organizational risks, whether internal or external risks. This program facilitates you to achieve your strategic goals and the organization’s objective by maintaining its financial growth and stability.

Credit Risk Management Courses

When a borrower takes a loan from any institution, there are the chances of repaying the debtor being a defaulter. Credit risk is the loss probability of the borrower. While developing an understanding and the relation between the bank’s capital and loan loss, the reserve is defined as credit risk management.

There is a promising and lucrative career in credit risk management. With the CRU program at Imarticus, you will learn to focus on a specific area of finance. This course will teach you to develop a strategy to manage risk because risk affects investment decisions. You will learn to quantify risk and become a credit risk analyst. 

The course in credit risk management teaches you to look at all the variables involved in the strategy and the risk involved therein. After becoming a credit risk analyst, you will perform various analytical techniques for evaluating the risk involved in lending and another business risk. You will learn to produce reports and recommend business entities about the best course of action, like credit limit and interest rate. The report by the credit risk analyst and his recommendation will help the business entity to give the borrowers the best credit options, which are also in the good interest of the lender.

Some credit risk analysts also have the power to make the final decision to approve or decline credit to the applicants. In most cases, this power vests with the financial managers or the loan committee members.

Credit Analyst course

After completing the CRU program at Imarticus, you will become a credit risk analyst. A credit risk analyst evaluates the creditworthiness of the new applicants and simultaneously examines the creditworthiness of the existing debtor. The analyst monitors the debtors’ ongoing financial performance and works in direct contact with the consumers for collecting necessary information. Also, the analyst may coordinate with retail sales agents or even with the credit officers.

At Imarticus, we help you explore various analytical techniques to evaluate the risk involved in lending or extending credit. For this, you will have to assess the financial statements, credit or job history, and payment report. You will also study the operation of the business, the local market, the other markets in which the business operates, and the competitiveness the business is facing.

What is a Credit Analyst Salary?

Posted on by Imarticus Learning

A credit analyst is a person who is responsible for analyzing the creditworthiness of a customer. Credit analysts assist in assessing the loan applicant’s ability to repay the loan and then recommend the application for acceptance or rejection. Credit analysts work in investment banks, credit card companies, commercial banks, investment companies, and credit rating agencies. Many other companies hire credit analysts for their credit departments. The credit analysts’ salaries are very lucrative making this job among the top professions to opt for people with an interest or background in commerce.

Before discussing the salary aspects of this role, let us first understand the job responsibilities, qualifications, skills, and career pathways and scope of a credit analyst in detail.

Job Responsibilities of Credit Analyst
A credit analyst performs a variety of roles. They collect financial information about loan applicants which includes their earnings, savings, purchase history, spending patterns, etc. Then they review this information and decide whether to approve the loan of the person or not. A Credit analyst also reviews problem accounts. For instance, an analyst in a credit card issuing bank review the defaulted payments history of clients to reduce the credit line or close the credit card altogether. A credit analyst can also recommend credit line extensions to clients with strong payment history.

Qualifications Requirements for Credit Analyst
To become a credit analyst one needs to have a degree in finance, accounting, or a related field. A credit analyst course can also help candidates looking for jobs in this field. The applicants for these jobs should have a decent knowledge of statistics, basic accounting and finance, calculus, ratio analysis, industry assessment, economics, and financial statement analysis. These subjects are necessary for working in risk assessment. Many companies and banks also provide candidates with on the job training to help them polish their skills.

Skills for Credit Analyst
Apart from qualifications, some other important skills for a credit analyst are:

  •  Communication skills
  • Quantitative analysisDiligence
  • Multitasking and prioritization
  • Industry knowledge
  • Financial software experience
  • Accounting
  • Problem-solving aptitude
  • Documentation
  • Attention to details

Career Pathways and Scope of Credit Analyst
Credit Analyst is an enjoyable career for those who love working with numbers. Their day to day job activities involve reviewing various numerical figures. They have an indoor office job with employment in major banks, credit unions, government agencies, and investment management groups, etc. With a degree in Finance or Accounting, one can apply for a job as a junior credit analyst in a financial institution. To further upgrade the career, one needs to have a good working experience and an additional credit analyst course or a degree to get a promotion or a good hike in the salary. The major pathways for credit analyst job roles are senior credit analyst, banking credit analyst, credit manager, etc.

The average salary of a credit analyst in India is around INR 5,92,605. However, the actual salaries vary from company to company and position to position. With experience, the salary figure rises to 1 million and above for professionals. Additional skills like loan underwriting, risk management/control, financial analysis, etc.help get an above-average pay.

A credit analyst is a responsible job that needs complete awareness and attention towards the work. A credit analyst is in charge of deciding whether a person or organization is eligible for a loan or not and if yes, then at what interest rate. Various factors need to be kept in mind while reviewing the applicants as your decision can change their future for better or worse.

How Can a Credit Risk Analytics Course Help You?

Posted on by Imarticus Learning

The world is becoming more and more complex. With the increase in complexities, the risk to different businesses has increased considerably. These risks call for effective risk management.
You can become a successful risk manager with the help of credit risk analytics. Credit risk refers to the potential risks associated with a company. Financial risks should be addressed immediately by a company using credit risk analytics. Generally, it arises due to the non-payment of dues by the borrowers. When a company lends money to a borrower, he puts himself in a position of risk. The company is looking forward to earning large profits on this risk taken. Therefore, companies need to analyse risk.

Importance of Credit Risk Analytics

Credit Risk Analytics has found its importance in recent times owing to several governance failures and the inability of a lot of borrowers to pay the money back due to the volatile markets. It is quite necessary to keep a tab on all the risk elements in the VUCA world. Therefore, a company which is into money lending business should keep a tap on all its borrowers. Initial review of the application before giving the money is even more crucial than taking corrective measures later. Modern companies have different credit risk models in place to check the creditworthiness of the buyer. Credit analysts keep a tab on this data to avoid any potential risks that may arise due to the non-payment of the borrowed funds. Credit risk analytics is not just used to make decisions on acceptance or rejection of loan applications but also to charge different rates of interest-based on the risk profile of the applicant. This application of technology in assessing the risk is a breakthrough. It has also given rise to several job opportunities which can be easily availed by people who have a finance or a technical background. You can take a credit risk analytics course to understand what skills are in demand if you want to become a credit risk analyst.

Prerequisites for Becoming a Credit Risk Analyst

A person needs to be a graduate if he wants a career in credit risk management domain. Also, he must have a good understanding of both Finance and Statistics because the job would mainly involve the use of these subjects. A credit risk analyst can work in a company as well as independently. He can look for an employment opportunity in any of the prominent sectors ranging from consumer retail to healthcare. With the growing needs of consumers, the requirement for money has also increased incredibly. Therefore, the number of people applying for loans has risen considerably. Due to the increase in the number of applicants, the number of data sets has further increased. Therefore, a professional must know how to manage several data sets at once.
How can a credit risk analytics course help you?

A course on credit risk analytics would be helpful as it would give you insights on what all is required to become a successful credit risk analyst. It will also help you in building the required skill set for the job. Given below are some of the training which will be a part of the course :

  • Data Modelling with the help of machine learning
  • Credit risk analysis using software like Python
  • Financial risk management
  • Data analysis and interpretation
  • Data science techniques to build algorithms for similar operations and also to bring in the element of automation

The list is not exhaustive. A course on credit risk analytics will broaden your perspective on the subject and make you ready for the job.

Also Read: How Do I Become Credit Risk Analyst

What is the Credit Risk Fund?

Posted on by Imarticus Learning

What is Credit Risk?

Before jumping in the details of a credit risk fund it is important to gain some context by understanding what credit risk entails.

Credit risk can be explained as the risk of loss that can occur when the borrower defaults on the loan and fail to repay the loan amount in a specified time frame.

Credit risk mainly arises when the borrowing party do not adhere to the terms and conditions of the loan. There are majorly 3 types of credit risks; this includes credit default risk, concentration risk, and sovereign risk. Now that we know what credit risk is let’s understand what the credit risk fund entails.

Understanding Credit Risk Fund

Credit risk fund is a type of debt fund that invests a majority of its portfolio funds, around 65-70% in less than AA-rated investment tools.

Let’s understand briefly how the rating works. Any financial instrument that has a higher rating is considered as less risky, the better the rating the lower is the risk involved. When risks are lower the return is also lower, so in case of risky assets, one can gain high returns.

The purpose of credit risk funds investing a majority of its portfolio in lower-rated financial instruments is to obtain high returns associated with high risk low rated tools.

Investment in low rated firms stock has a dual advantage; you gain from the higher interest rate and also gain from capital gains when ratings improve. Given the lower investment duration, the interest rate risk is lower. It also has the potential for investors to gain double-digit yields.

Before investing in any credit risk fund it is paramount to understand the taxation associated with these credit risk funds. Dividends distribution tax of around 29% applies to the scheme. Short term capital gains taxes are also applicable to the returns earned within 3 years.

Factors to consider before investing in a credit risk fund

Before investing in a credit risk fund it is important to analyse the pros and cons to find whether its best suited for your financial requirements or not. Credit risk funds generally have a high level of liquidity risk involved. Investors should avoid the risk of concentration by investing in a diversified portfolio. Looking out for funds with lower expense ratio is also beneficial to the investor. Let’s jump into some important considerations for investing in credit risk funds.

Investing in credit funds using diversified mutual funds is advisable, especially when you don’t have the expertise in the domain. Also, a large amount of investment in credit risk funds should be done after proper consultation as there is a high risk involved. Larger funds are advisable when investing in accrual credit risk funds.

The reason here is that the larger funds provide a safety net in terms of diversification and risk spreading. Choosing funds with lower expense ratio is the key, especially for the first time investors.

In addition to this, you should follow the general best practices in investing. You should go for well-experienced and reputable fund managers and investment firms who specialise in credit risk funds. You should always check the level of concentration of the portfolio; it should not be concentrated in securities from a specific group.

Diversification is the key to mitigating the risk here. Investors should keep the high risk-return profile of this fund and those who are risk-averse should not opt for credit risk funds as an investment tool. People who fall under high tax slabs can consider investing in credit risk funds for saving on taxes.