Research Paper on Credit Risk Management

Introduction

The article Credit risk management software analysis by Cranciun MIhaela-Daciana is centred on the examination of the particular elements of the current software packages that are tailored for management of credit risk. Credit risk management is crucial for financial organizations which offer loans to individuals as well as business entities. Credit always come for diverse reasons such as bank mortgages and purchases made through credit cards. It is noteworthy that such financing loans and credit often have the probability of being defaulted. Therefore, to recognize a borrower's risk level the institutions that offer credit usually gather as much information as possible about the potential borrower. The following section provides a brief analysis of some of the statistical predictive analytic techniques as discussed in the aforementioned publication.

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CRM3 - The Loan Portfolio Analyzer

The introduction of CRM3 is associated with the need to manage micro risk. It is one of the loan portfolio analyzers that provides banking institutions with an opportunity to look at several fields of loan data with the aim of creating data that is vital for managing both concentrations and risks. CRM3 solves three key problems like the need to have advanced controls at all times to measure the risks and general effective business management. Additionally, CRM3 helps solve the rising regulatory expectations like concentration reporting. Lastly, CRM3 offers solution probative versus historical risk analysis as one of the methods of risk management. Some of the key features of CRM3 include Embedded Crystal TM for report formats, dynamic information filtering, a hide and show features level in summary windows and Export to Excel TM among others. The software can be used to plot customized graphs and charts as well as several more complicated uses.

Commodity XL for Credit RiskTM

Commodity XL for Credit RiskTM provides solutions to three types of problems which include exposure, collateral as well as counterparty management challenges. Underexposure management, the main problem that organizations face is the absence of timely information that exacerbates credit risk. Commodity XL for Credit RiskTM offers real-time as well as integrated credit procedures for both efficient and precise credit analysis and resolutions. In terms of collateral management, the key issue that businesses face is the incorrect perception of liquidity and the exposure brought about by error-prone collateral management procedures. Commodity XL for Credit RiskTM offers better enterprise transparency to examine the liquidity responsibilities which allows efficient monitoring and evaluation of both the inbound and outbound collateral which in turn enhances the cash flow with greater confidence. Regarding counterparty management, Commodity XL for Credit RiskTM has the functionality that not only reconciles but also manages all the contractual as well as the risk-related data throughout an enterprise.

ROSELLA

Rosella is a unique application because it is a CMS Data Mining as well as a Predictive Knowledge software. The programs offer diverse financial solutions and support every toll that is required in creating various financial risk management solutions such as rule-based modelling and model validation. It also offers all the features necessary for corporate performance management, balanced scorecard for financial solutions as well as business activity monitoring. Since risk management is critical and particularly in the financial industry. The consequences of ignoring sound risk management are problems that can be mitigated through various risk analysis methods such as loan default modelling, finance risk modelling and predictive loan default analysis.

Reference

Mihaela-Daciana, C. (2009). CREDIT RISK MANAGEMENT SOFTWARE ANALYSIS. Analele Universitatii Maritime Constanta, 10(12, 365-370).