Credit risk training covers portfolio optimization, securitization, derivative products, financial analysis, and regulatory requirements. It is relevant to investors, advisors, and corporate investment businesses and can be delivered in-house or through professional training organizations. Training can focus on different aspects of credit risk analysis, including debt types, credit scoring, and the probability of corporate failure. It can also cover portfolio credit risk models and the use of credit derivatives in a diversified portfolio.
Topics covered in credit risk training include portfolio optimization, securitization, derivative products, financial analysis and regulatory requirements. Training can be carried out in-house by professional companies or in the form of courses by professional training organizations. It can be aimed at beginners in the subject or experienced professionals. Credit risk training can be delivered at conferences covering a variety of current issues, or it can be delivered at specialized seminars. A course might consider an aspect of credit risk analysis or look at credit risk in a specific country or region of the world.
Credit risk training is relevant to individual investors, professional advisors and corporate investment businesses. While much of the training is geared toward credit risk managers, private investors can benefit greatly from training in different types of credit derivatives. This can include the use of complex products, such as synthetic collateralised debt obligations, which provide different tranches with different levels of risk associated with the tranches. Investors can learn to understand the reasons why the risk levels of different debt tranches may differ and gain greater knowledge of the methods used to assess credit risk levels.
Portfolio optimization is also of great interest to individual investors, and credit risk training can focus on portfolio credit risk models. Balancing risk and return for investors in a diversified portfolio is a primary concern. The use of instruments such as credit derivatives in a portfolio is therefore a specialized topic that could be the subject of a credit risk training course or conference.
Analysis of debt types is important in credit risk training. A course might cover assessing distressed debt or looking at products that offer different tranches of debt that involve different levels of risk. A credit risk training course can also look at different aspects of debt and equity or focus on the characteristics of subordinated or senior debt. Credit scoring and the work of credit rating agencies are also covered in training courses.
Credit risk analysis can also focus on the probability of corporate failure. By analyzing financial statements and using financial ratios, training can look for signs that indicate a company has a liquidity problem. Cash flow analysis can be used to examine whether the company will be able to pay its debts as they come due. Training can also cover topics such as off-balance sheet financing, which can result in a stronger balance sheet than it actually is. Historical trends in liquidity ratios over recent accounting periods can be used in combination with cash flow forecasts to analyze credit risk going forward.
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