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Introduction

  • Jiří Witzany
Chapter

Abstract

Many monographs on credit risk start, and deal, essentially only with different computational methods for measuring and modeling credit risk. As the title indicates, we want to focus not only on various modeling techniques for credit risk pricing and measurement, but also on key issues of credit risk management; i.e., we also want to look at the proper setting of the credit risk organization, credit risk processes, powers, and controls. It may be observed from many failures and mishaps which have occurred in various banks around the world, including the recent systemic crisis, that the key problem often lies, rather, in conflicts of interest, insufficient controls, or the low levels of power vested in those who knew that there was a problem (and who were able to gauge the risks correctly) but were not able to prevent, or limit, the risky transactions. This experience can also be confirmed by the author, who was responsible for overseeing the risks inherent in trading activities, as well as the later credit risks in the classical banking activities of a large Czech bank in the late nineties, and in the first half of the previous decade. On the other hand, in many cases, in particular during the recent crisis, insufficient controls and regulation have been partially connected to the low level of understanding, and consequent underestimation, of the risks involved. Hence, to summarize, one should neither overestimate nor underestimate the importance of credit measurement techniques with respect to the classical credit risk management issues. We shall start discussing the credit risk organization and management issues in Chap. 2.

Keywords

Credit Risk Credit Derivative Recent Crisis Late Ninety Modeling Credit Risk 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Jiří Witzany
    • 1
  1. 1.Faculty of Finance and AccountingUniversity of Economics in PraguePragueCzech Republic

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