Measures of managing Credit risk : 1) Position limits 2) Liquidity limts 3) Performance stop outs 4) Risk factor limit
Measures of controling Credit risk: MTM, collateral, payment netting, setting credit standards, using credit derivatives
What is the difference btn Managing or controling? Can somebody help
Will read the book. Here is my thoughts: Managing credit risk in manager or fund level. Controling credit risk in contract level.
Managing means setting a policy of how and when to act.
controlling means doing an action or executing with the policy as your objective . One only tells where you need to go , the other gets you there.
Thanks Rahul’s for your post / question . These kinds of one off q could appear in AM section
What was the most common form of controlling credit risk again? I think position limits?
In books, limited exposure, MTM and etc. are under “managing credit risk” section, while the position limits and liquidity limits are under capital allocation(or risk budgeting) section.