Managing and Monitoring Credit Risk after the COVID-19 Pandemic Essay

This essay sample on Managing and Monitoring Credit Risk after the COVID-19 Pandemic for Singapore students.  Here we will discuss What is credit risk management?, the Impact of covid on credit risk, Credit risk management after a pandemic, Challenges, New approaches, etc.

This COVID-19 Pandemic Essay teaches us a lot about how to manage and monitor credit risk. If you’re interested in downloading this essay, contact our company for custom essays!

Introduction- Managing and Monitoring Credit Risk after the COVID-19 Pandemic Essay

Everything has been affected by the recent pandemic outbreak. One of these affect entities is “Credit Risk”. In this sample essay, we shall be discussing what is credit risk and how it was affected by the pandemic. For our topic of discussion shall be “Managing and monitoring credit risk after the COVID-19 pandemic”.

Moving on, we shall be dividing the sample essay into different sections of the sample essay. Reason being that it will help you understand concepts better and easier. Moreover, we shall also be including all of the different topics related to the topic.

Furthermore, we shall start our discussion by looking at the credit risk. Nevertheless, later on, we shall be looking at the definition of credit risk management, the impact of covid, as well as the credit risk management after the pandemic. Thus, without further adieu:

Main body- Managing and Monitoring Credit Risk after the COVID-19 Pandemic Essay

What is credit risk management?

In the previous section, we read what is credit risk, here we shall be looking at what the definition of credit risk management is. Thus, the definition of the same goes as follow:

The term “Credit Risk Management” is a practice aimed at reducing credit risk. This is done by analyzing the bank and its treasury’s adequacy as well as the loss of loan reserves at any given instance of time.

Nevertheless, credit risk management has been a great challenge for financial organizations throughout history and even today. Regardless, both the credit risk and credit risk management were affected by the covid-19 pandemic. We shall be discussing the full scope of the same in the next section of the sample essay.

Impact of covid on credit risk mangement

We all already know that the covid pandemic affects all of the worlds. Similarly, the Covid-19 pandemic severely affected economics across the globe. Consequently, financial institutes and people have been affected alike. While bank’s treasuries and reservoirs were affected in a negative way, countless people lost their jobs. Hence, the credit risk related to them increases.

Moreover, financial institutes such as banks lost their loan reservoirs, their ability to provide credit or lending was considerably affected. Consequently, banks are less likely to take higher risks. Apart from these direct effects, covid caused institutions to move to different and newer technologies. This is done in order to cope with the loss caused by the covid.

Moving on, we shall be looking at examples of these changes in the next section of the sample essay. For we shall be looking at the topic of “Credit Risk management after pandemic”. Thus, without further adieu:

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Credit risk management after a pandemic

The covid 19 pandemics have caused some specific changes in credit risk management and mitigating. As we discussed before, Financial institutes moved to several different methods to cope with situations.

Thus, in recent times banks are continuously seeking new methods as well as simultaneously adjusting new dynamics. Moreover, the impact of the pandemic is measured as a whole on national or regional economies, impact by sectors and subsectors as well as specific credit risk issues that need real-time monitoring.

Furthermore, we shall be looking at the new challenges that arise following the pandemic and new approached to counter them. These are, as mentioned below:

Challenges in credit risk management

Here, we shall be looking at the new challenges or dynamics that arose after the covid pandemic in the financial industry. Thi, these are following:

1. Considerable changes are noticed in creditworthiness at the sector as well subsector levels
2. Difficulty in differentiating potential borrowers in the same sector or subsector
3. Data used in pandemic-like conditions are insufficient, dated, as well as not automated into decision-making processes
4. Socially responsible collection fails to meet consumer’s changing preference
5. A considerable amount of nonperforming exposure is starting and needs to deal with.

New approaches in credit risk management

In this sub-section, we shall be looking at potential new solutions or approaches to the challenges and dynamics discussed above respectively. Moving on, these are, as mentioned below:

1. Conducting analysis of demand, shock, as well as trajectories of recovery in terms of Probability-to-default multipliers
2. Using a more thorough method to monitor potential borrowers and estimate their resilience
3. Transaction data, as well as high-frequency data, should be checked to derive cash flow, affordability, revenue trends for a better decision-making process
4. The institution should move to a customer assistance interaction model and also make it a digital transformation priority
5. Sector or subsector-specific solutions should be used and the cost-benefit of organic vs inorganic options shall be evaluated.

Conclusion:

For Singapore companies, it is important to have a risk management plan. Credit risk management should be studied and implemented by all organizations in the event of another pandemic or disaster. This will ensure that businesses can continue operating smoothly after such an occurrence without any disruption from credit risks. In order to control credit risk, monitoring needs to occur frequently with accurate data analysis. Organizations need access to financial resources if they want their business operations unaffected by external events like COVID-19 Pandemics or disasters.

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You can use our customer helpline to hire MBA writers for risk management assignments. However, if you want to read more sample essays like this one. You can visit our website. Here you find several samples covering different subjects like Accounting, business, Economics, Engineering, and obviously finance.  For example AI and its Applications in Banking & Finance Industry, Financial Response to Pandemic Singapore, Financial Technologies and Innovations in Singapore, International Monetary Economics, Credit Risk Modeling Case Study, Credit Score Analysis Case Study, and many more.