The Mechanics of Credit Risk Analysis (Online)

Course Structure

The course takes place over 14 weeks and comprises seven core units. The units will be released every two weeks from the start of the course. Download the units or study completely online. Exercises that will help you further understand course content.

Assessment and Post Graduate Certification

At the end of each unit there is an assessment that will allow you to benchmark your growth in knowledge and understanding. For those wishing to receive a Post Graduate Certificate from Middlesex University, an additional marked assignment of 5000 words will also need to be submitted. The assignment will be based on an on-going case study that runs throughout the duration of the course.

Syllabus modules

Unit 1 - An introduction to credit risk analysis

• Understand the essence of credit and how the credit market works
• Learn how to clear process that is foundational for credit risk analysis set out
• Gain the ability to apply the key issues around the strategic intent of credit risk management

Unit 2 Credit risk applicable to corporates

• Gain a clear understanding and approach to the credit process from both a qualitative and quantitative perspective
• Obtain an understanding of the environment in which a potential client operates in from a macro level
• Understand the industry in which the corporate operates and the specific risks in which the client operates
• Ability to review the company from both a strategic perspective as well as from an understanding of management competencies

Unit 3 - Financial (quantitative) risks

• Gain an understanding of what the business actually does to make a profit
• Establish the principles on which the financials have been prepared and on what basis can they be relied on for credit (the auditor’s report)
• Determine how to interpret the financial statements for credit with a focus on establishing the quantitative risks
• Ability to use financial ratios to obtain additional insight to the financial statements
• Ensure there is a sound understanding of working capital and the impact on the business and the cash flow

Unit 4 - Cash flow forecasting and modelling

• Learn how to project and forecast the financial statements - using concepts in earlier units
• Understand that cash flow pays back the loan – incorporating the business model to the cash flow forecasts established the ability of the borrower to pay back the loan

Unit 5 - Pricing credit risk

• Gain an understanding of the how credit pricing is established in a bank
• Review and understand the different pricing methods

Unit 6 - Collateral and covenants

• Understand what collateral is and how it works as a credit enhancer
• Learn how to structure covenants which are beneficial for both the lender and borrower

Unit 7 - Writing a credit report

• Gain the techniques to plan and write the credit information memorandum which should capture all of the analysis work in one document with the view to be used for making the final credit decision