Credit risk management and mitigation

Abstract

This paper discusses the consequences of the market crisis in 2008 and the way that credit risk is managed within firms using traded instruments, including OTC derivatives, and the use of collateral as a tool to mitigate that credit risk exposure. The active management of credit risk can no longer be a preserve of the banks and broker dealers, but getting an end-to-end infrastructure to understand, monitor and evaluate credit risk is providing a challenge in the industry at a time of resource and investment constraints.