Welcome to This Training Material for Credit Risk Policy Development!

This training material is designed to provide a foundational understanding of the key philosophies and methodologies behind credit risk policy development. It is ideal for newcomers to the field of credit risk management seeking to learn the basics, as well as for professionals already working in the field who wish to refresh their knowledge. Additionally, it serves as a valuable resource for trainers who aim to teach credit risk management to others.

The motivation behind this training material stems from my personal struggle to find a comprehensive and easy-to-understand resource when I first entered the field of credit risk management. As our team grows, it becomes increasingly important to pass on knowledge to new members in a structured and effective manner. This material also aims to foster a culture of knowledge sharing, which I believe is crucial for the success of any organization.

I publish this material publicly to ensure it is general and applicable to a wider audience, as it contains no sensitive or specific information about the companies I have worked for or am currently working for. This approach also invites feedback and improvement from the community.

“So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets.” (Matthew 7:12, NIV)

Contents:

• Fundamentals
  • The Art and Science of Decision Making
  • Fundamentals of Interest Rates
  • Supplementary Note: Efficient Search Algorithms (WIP)
• Key Objectives and Its Componets
  • The Balance Between Risk and Reward (WIP)
• Prediction Into the Future
  • Estimating Long-Term Impact from Short-Term Outcomes
  • Creating Models of the Environment
  • Estimating the Response to Interventions
• Typical Product Structures in Consumer Finance
  • Consideration of Product Structures
  • Comparison of Consumer Finance Products
  • Supplementary Notes on Credit Card Model
• Loan Origination
  • Antifraud
  • Underwriting or Loan Origination
• Post Loan Account Management (WIP)
  • Punishing Bad Behavior (WIP)
  • Rewarding Good Behavior (WIP)
• The Upstream and Downstream of Credit Risk Management (WIP)
  • Downstream: Collections and Fundings (WIP)
  • Upstream: Product Design and Channels (WIP)
• The Role of Data in Credit Risk Management
  • Defining Data
  • Acquiring Relevant Data
• General Data Analysis Techniques
  • Objective
  • Understanding of a Problem/Observation
  • Deriving Actions
  • Communicating Results
  • Analysis Hygiene
  • Preparing For the Next Problem
• Core Infrastructure for Credit Risk Management (WIP)
  • The State of Loans: Modeling Loan Core as a Finite State Machine
• Launching a Product in New Market (WIP)
• Practical Guides
  • Defining Risk Tiers
• Commonly Asked Questions (WIP)
• Knowing What We Don't Know
• Useful Resources
  • Decision Making
  • Causal Inference
  • Economics and Finance
  • Books on Risk Management
  • Survival Analysis
  • LLM and Credit Risk
  • Others