Credit risk mitigation

Credit risk mitigation is a concept of great interest to those concerned with the capital position of financial institutions. Things like the leverage ratio and its fabled denominator, as percolated by that splendid assembly of prudent Schweizers, the Basel Committee on Banking Supervision.

Credit risk mitigation techniques

Banks may use credit risk mitigation techniques (jauntily known as “CRM techniques” or even “tools”) to reduce the impact on their capital calculations of counterparty credit exposure in their trading businesses.

Bedtime reading

• Second consultative document on revisions to the Standardised Approach to Credit Risk HEY! WAKE UP!

References

Regulatory Capital Anatomy™ The JC’s untutored thoughts on how bank capital works. →Go uptown {{{2}}} Capital Requirements Regulation: 575/2013/ (EUR Lex) | BIS publications: BIS capital requirements for bank exposures to central counterparties | leverage ratio | RWA | portfolio risk | systemic riskIndex: Click ᐅ to expand: Regulatory Capital Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.