The Value of the Qualitative & Quantitative Criteria in the Evaluation of the Credit Risk

This article discusses about the credit risk that financial institutions are expose to due to a booming market in providing high creditability. The article explains the usage of both Qualitative and Quantitative criteria to evaluate the creditability that institutions should provide to their clients/counterparties. It shows how such creditability must be balanced with the actual counterparty’s rate that also indicates the degree of potential risk exposure. It also emphasizing in the importance of dynamic simulation to design the strategies that could be applied for the existing and new types of credit products. Moreover, it discusses how such simulations and analysis of strategies can be used to increasing profitability as well as providing a transparent picture and management on the future risk exposes. Finally, it shows how the evaluation of creditability and its potential outstanding risks are linked to the three pillars of Basel II.

The article was published in the biggest political & financial Greek Newspaper named KATHIMERINI both on paper and electronic versions.