On completion of this Retail Credit Risk Management module II, candidates should be able to:
Retail credit risk is essentially different to corporate credit risk. Corporate risk is based on risk resulting from the default of a particular corporate customer, which normally means big numbers. However, retail credit risk is based on a portfolio made up ofof a large number of customers with small loans.
When we handle such retail credit risk, there are two sides to the picture:
First, we will look at the individual borrower, analysing their financial standing, which reflects their capability to repay.
Second, we consider the health of the retail credit portfolio and analysing its performance, taking into consideration the variety of ratios that reflect the healthiness of the operation.