![]() In addition, the effectiveness of the measures implemented in risk controlling is measured, and new impulses are generated if necessary. The most commonly used management tools include: - Risk-adjusted pricing of individual loan transactions - Setting of risk limits for individual positions or portfolios - Use of guarantees and credit insurance - Securitization of risks - Buying and selling of assets Monitoring Risk monitoring is used to check whether the risks actually incurred lie within the prescribed limits, thus ensuring an institution’s capacity to bear these risks. Planning and management Furthermore, risk management has the function of planning the bank’s overall risk position and actively managing the risks based on these plans. Credit Risk Management process includes Credit Investigation, Financial Analysis, Credit Assessment, Credit Approval, Documentation, Monitoring ( Follow up, Supervision and Control) and Credit Recovery procedures. The purpose of credit risk management is to ensure that individuals taking the risk have full knowledge about it, the bank or financial institution is exposed to an approved risk limit, the risk related decisions are in line with the business strategies, the compensation for the risk is adequate and sufficient capital support is there to buffer the risks. It includes detection, measurement, matching mitigations, supervision and control of the credit risk exposure. Credit Risk Management process permits the banks to proactively manage loan portfolios in order to minimize losses and earn a satisfactory level of return for shareholders. Credit risk is considered as a critical factor that needs to be managed by the banks and financial institutions. In credit risk management banks use various methods such as credit limits, taking collateral, divers Dhaka ation, loan selling, syndicated loans, credit insurance, securitization and credit derivatives. ![]()
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