Credit risk control basics, need to master which key points are what

Credit wind control practitioners 25 basic knowledge

1, credit

Credit is the embodiment of a certain economic relationship between the different owners of the borrowing and lending behavior, is the repayment of the conditions of the value of the movement of the special form of the creditor lent money, the debtor to repay on time and pay a certain amount of interest on credit activities.

2, microcredit

International community generally on the lack of enjoyment of goods not fully enjoy the financial services of low- and middle-income groups and small and medium-sized enterprises to provide more financial services collectively referred to as microfinance (Microcredit).

3, credit

Credit is a kind of other people recognized the future will to perform and the ability to perform, credit is a person's intangible assets.

4. Risk

Risk is generally considered to be bilateral, i.e., upper side risk and lower side risk. Lower side risk refers to a kind of uncertainty of future loss, and upper side risk refers to a kind of uncertainty of future profit, i.e., the possibility of bringing loss and profit coexist.

5, credit risk

Credit risk refers to the commercial banks and other institutions in the credit business operation process, due to a variety of internal and external uncertainties, the possibility of economic loss of assets.

6, information asymmetry

Information asymmetry (asymmetric information) refers to the transaction of the information owned by different people, in the credit relationship, the borrower can always be fully aware of and grasp the credit institution's credit policy, credit system, credit supervision and other information, while the credit institution is not possible to have and grasp all the information of each borrower. information, which creates an information asymmetry in the credit relationship, while the borrower has an information advantage, so that credit institutions are often at a disadvantage.

7, liquidity risk

Commercial Banks Liquidity Risk Management Guidelines defines "liquidity risk" as the risk that a commercial bank, although solvent, is unable to obtain sufficient funds in a timely manner, or is unable to obtain sufficient funds in a timely manner and at a reasonable cost, in order to cope with the growth of assets or to pay the debts as they fall due.

8, strategic risk

Strategic risk comes from four main sources: lack of overall compatibility, flawed strategy, lack of resources, and quality assurance.

9, compliance risk

Compliance risk refers to the possibility of losses due to illegal and unlawful operations or errors in assessing the legal compliance of operations and operations, as well as the possibility of expanding the risk of losses due to insufficient understanding of the legal consequences of the above errors and mishandling of the risks.

10, operational risk

In the Basel Committee on Banking Supervision in paragraph 644 of the agreement and the "Guidelines on Operational Risk Management for Commercial Banks" developed by the **, operational risk is defined as the risk of direct or indirect losses caused by inadequate or faulty internal procedures, employees and information technology systems, as well as external events.

11. Credit Risk

Credit risk is the most direct and major risk in microfinance operations due to the potential, long-term, broken nature of credit risk and the difficulty of controlling it!

12, market risk

Market risk refers to changes and fluctuations in interest rates, exchange rates, prices in market transactions, which may lead to losses arising from the portfolio or financial assets held.

13, risk management

Risk management is a social organization or individual used to reduce the risk of negative results of the decision-making process, through risk identification, risk assessment, risk evaluation, and on this basis to select and optimize the combination of various risk management techniques, the implementation of effective control of risk and properly deal with the consequences of risk-induced losses, so as to minimize the cost of harvesting the maximum security. The maximum security at the minimum cost.

14. Risk exposure

Risk exposure refers to unprotected risk, i.e., credit balances that may be exposed to risk due to debtor defaults, and refers to the risk actually borne, which is generally linked to specific risks.

15, risk warning

Risk warning is the name of a system. The full name is "Risk Early Warning System".

16, risk identification

Only on the basis of correctly identifying the risks they face, people can take the initiative to choose the appropriate and effective way to deal with. Microfinance institutions must be good at discovering, foreseeing and capturing the various potential risks faced by clients in the course of business.

17, risk avoidance strategy

Credit risk avoidance is the microfinance institutions in accordance with their own risk appetite characteristics, choose those credit projects suitable for their own risk requirements, at the same time, to give up those who do not meet their own risk requirements of credit projects. Microfinance institutions must carry out credit analysis of the borrower applicant, based on the results of the credit analysis to decide whether to avoid, in other words, credit analysis is the prerequisite for avoidance, only on the basis of the credit analysis of the avoidance is not blind, it is necessary.

18, risk diversification strategy

For the credit business, not only to concentrate funds to support good efficiency, development potential of key industries, key customers, but also pay attention to credit investment can not be over-concentrated in a certain or a few key, pay attention to the industry to achieve decentralization and customer dispersion.

19, risk transfer strategy

Specific ways to transfer credit risk: loan risk to the debtor; loan risk to the debtor has a relationship with the third party transfer; loan risk to the insurance agency transfer; loan risk to the public.

20, loan risk control strategy

Loan risk control strategy refers to the lender in the pre-credit, credit and post-credit to take appropriate measures to prevent or reduce the loss of loan credit risk strategy. In this sense, risk control includes risk diversification and risk transfer.

21, risk compensation strategy

No matter how effective measures to control, reduce, reduce, diversify, transfer sub-risks, risk loss is always possible, so such losses also need to risk compensation.

22, pre-credit investigation

Microfinance institutions pre-credit investigation, refers to the microfinance institutions to accept the borrower's application, the microfinance institutions of credit and risk control personnel, through a specific investigation methods and procedures, the borrower's credit rating as well as borrowing the legitimacy, security, profitability and other circumstances to investigate, understand and analyze, to verify the collateral, the pledges, the guarantor's condition , the process of assessing and measuring the degree of loan risk.

23. Post-credit management

Post-credit management mainly refers to the sum of loan management behaviors in the whole process from the time of loan issuance by the microfinance institution until the full recovery of principal and interest, i.e., the post-loan management personnel of the microfinance institution through the creditworthiness of the borrower, cash flow, business environment, operation, competitiveness, financial situation, contract fulfillment, security measures, and process control. That is, the general term for a microfinance institution's post-credit management personnel to follow up, investigate, monitor and analyze various important aspects that may affect the borrower's repayment of loans on time and in full, to judge the borrower's willingness and ability to perform accordingly, and to take corresponding preventive and remedial measures for the significant risks found in the process of post-credit management.

24, loan recovery

Loan recovery refers to the borrower in accordance with the repayment plan and repayment method stipulated in the loan contract, the principal and interest of the loan will be recovered on time and in full.

25, risk culture

The bank's philosophies, traditions, preferences and lending standards are a factor in the formation of risk culture, but the personality of the top heads and their personal characteristics, such as knowledge, ability, prejudices and weaknesses play a decisive role in the good or bad of the risk culture, and he is the seed of the risk culture, which will penetrate into the minds of the employees in an imperceptible way and become the an invisible rule of the organization, and become a way of thinking and behavioral patterns to deal with business.