Essay About Credit Risk Analysis And Main Causes Of Bank Failures

Advanced Credit Risk Analysis and Management by Ciby Joseph
Book reviews
Advanced Credit Risk Analysis and
Management
BY Ciby Joseph; John Wiley & Sons,
Chichester; 2013;
ISBN 978 1-118-60491-5; 427 pp.
Credit risk has been always considered to be the
basic type of risk. It was the first risk addressed in
Basel regulations in 1988. The dynamic development
of credit risk analysis tools started to occur in the last
decade of the previous century when several
important proprietary models were developed,
including KMV, Creditmetrics, Credit Risk Plus, to
mention just a few. This period was also
characterised by the launch of credit derivatives
designed to mitigate credit risk.
Despite its basic nature and relatively high progress
in analytical methods, credit risk has been one of the
main causes of bank failures, the subprime crisis in
US being the most spectacular example. It seems that
there is a need to ensure that the relatively advanced
and sophisticated credit risk analysis tools are used
effectively in common practice, while at the same
time paying careful attention to model risk.
This book by Ciby Joseph, a credit expert with
years of banking experience, is strongly practice
oriented. As the author writes in the preface, the
book is meant to be ‘a thorough and comprehensive
treatment of credit risk directed to a relatively wide
audience’.
The material contained in this book is structured
in 25 chapters, divided into eight parts. The first part
discusses the foundations of the credit risk
management process, distinguishing between
financial institutions and non-financial firms. It gives
a valuable