Handling credit risk is a complex procedure. To decrease his credit risk, lender wants to do a credit check on a person (borrower).
He also wants that the borrower provides guarantee that the money of the lender will be safe i.e. third-party guarantee or mortgage insurance.
The method of handling the loss of loan reserves and capital assets of a bank or organization is called credit risk management. It improves the bank’s performance while adhering to various regulations of the banks. It also access and collects data i.e.
financial analysis and analysis of commercial real estate of the person. Data collection which is indirectly or directly related to cash flows and finance by testing the performance of the portfolio via various stress factors are the components of credit risk management.
Impact of economic conditions and trend analysis are important here. Majority of transactions in business are depends upon credit. Therefore before doing business with a company, you need to check credit history of the company or person.
Risk Management is defined as proper uses of management practices, procedures and policies, for setting the communication, monitoring, treating, assessing, analyzing, identifying, context etc.
it provides management a lots of information regarding risk and their consequences. You can apply risk management to the various levels of an company as regard to the operational and strategic contexts to identification of risk areas, decisions and special projects.
The risk management process is a simple process. You need to detect the risks. Make a list of all those things that prevents your capacity to meet various objectives i.e.
failure to capitalize on a professional opportunity. Delay in works because of some other employee, problems in system, resignation given by a member of the team etc.
Your company needs to find the reasons for all these problems. To manage risks related to a project, strategy for mitigation and risk assessment are the two main factors.
The examples of potential risk in multiple categories are: – people, environment, political, financial, weather, contractual, client, schedule, cost and technical.
After the detection of potential risks, risk is evaluated by the project team. The project team decreases the risks through transfer of risk, reduction of risk, sharing of risk and risk avoidance.
These techniques offer the effective solution to decrease the project’s profile risks and individual risks.
Therefore the project management team will finish or decrease the risk. For the benefit of the project investment should be balanced.